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Solta Medical Reports Strong Second Quarter 2009 Results
Date:7/30/2009

HAYWARD, Calif., July 30 /PRNewswire-FirstCall/ -- Solta Medical, Inc. (Nasdaq: SLTM), a global leader in the medical aesthetics market, today announced results for the second quarter ended June 30, 2009. Revenue for the quarter was $27.4 million, an increase of approximately $9.5 million, or 53%, as compared to the second quarter 2008 reflecting increased revenue as a result of the acquisition of Reliant Technologies, Inc. on December 23, 2008. The company generated $2.4 million in cash flow from operations during the quarter and achieved profitability.

Solta Medical's reported results for the second quarter of 2009 include non-cash purchase price related charges of $1.4 million and non-cash stock based compensation charges of $0.9 million. The GAAP net income for the quarter including these charges was $0.1 million, or $0.00 per share as compared to a net income of $2.0 million, or $0.08 per share reported for the second quarter of 2008. The non-GAAP net income for the quarter excluding these charges was $2.3 million, or $0.05 per share as compared to a non-GAAP net income of $3.0 million, or $0.12 per share reported for the second quarter of 2008.

"Our second quarter performance further reflects the successful integration of our Reliant acquisition. Our revenue rose sequentially from the previous quarter by $2.2 million, or 9%, while our operating expenses declined from the previous quarter by $2.3 million, or 12%," said Stephen J. Fanning, Chairman of the Board, President and CEO of Solta Medical. "As with the first quarter, international markets accounted for 57% of total revenue. U.S. and international revenues grew sequentially from the first quarter by 10% and 8%, respectively. We also drove sequential revenue growth in the range of 7% to 10% from all major product segments with tips and other consumables accounting for 49% of total revenue."

"In addition, our working capital has grown by $2.4 million, or 17%, from year-end 2008. We demonstrated solid management of our inventory levels which have declined by nearly $7 million, or 38%, from year-end 2008. At the end of the quarter we had cash and investments of $19.1 million," Mr. Fanning concluded.

Financial Goals for 2009

The Company updated its financial goals for 2009 as follows:

  • Realize up to $25 million in cost synergies as a result of the acquisition of Reliant Technologies, Inc.
  • Generate positive EBITDA for the full year 2009
  • Generate positive cash flow from operations for the second half of 2009
  • Achieve a non-GAAP gross margin in the range of 64% to 66% for the full year 2009 excluding non-cash amortization charges and non-cash purchase price related adjustments. The gross margin has been decreased from the previous goal of 70% due to a higher proportion of revenue derived from both international distributors and system upgrades.

Non-GAAP Presentation

To supplement the condensed consolidated financial information presented on a GAAP basis, management has provided non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP EBITDA, non-GAAP net income (loss) and non-GAAP earnings (loss) per share measures that exclude the impact of purchase price related adjustments, severance costs, merger related costs, and stock-based compensation expenses, all 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 measures, which it uses to measure the performance of ongoing operating results, against prior periods and against our internally developed targets. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP and the reconciliation of non-GAAP financial measures attached to this release.

Conference Call Information

Solta Medical will host a conference call and webcast today, Thursday, July 30, 2009, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific) to discuss the financial results and current corporate developments. The dial-in number for the conference call is 877-941-1848 for domestic participants and 480-629-9722 for international participants.

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 800-406-7325 for domestic callers and 303-590-3030 for international callers. Both callers will need to use the Passcode 4093352#. To access the live webcast of the call, go to Solta Medical's website at www.solta.com and click on Investor Relations. An archived webcast will also be available at www.solta.com.

About Solta Medical, Inc.

Solta Medical, Inc. is a global leader in the medical aesthetics market providing innovative, safe, and effective anti-aging solutions for patients which enhance and expand the practice of medical aesthetics for physicians.

The company offers products to address aging skin under the industry's two premier brands: Thermage(R) and Fraxel(R). Thermage is an innovative, non-invasive radiofrequency procedure for tightening and contouring skin. As the leader in fractional laser technology, Fraxel delivers minimally invasive clinical solutions to resurface aging and sun damaged skin. Since 2002, over one million Thermage and Fraxel procedures have been performed worldwide. Thermage and Fraxel are the perfect complement for any aesthetic practice. Our products are available in over 100 countries. For more information about Solta Medical, call 877-782-2286 or log on to www.Solta.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our financial goals for 2009. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Solta Medical's actual results to differ materially from the statements contained herein. Factors that might cause such a difference include the possibility that the development and release of new products and initiatives do not proceed as anticipated, the market for the sale of these new products and initiatives does not develop as expected, the remaining risks and uncertainties with the integration process, the risks related to our future liquidity if we fail to achieve adequate levels of revenue or sustained profitability, if unanticipated expenses or other uses of cash arise or if we are not able to maintain compliance with borrowing facility covenants and the risks relating to Solta Medical's ability to achieve its stated financial goals as a result of, among other things, economic conditions and consumer and physician confidence causing changes in consumer and physician spending habits that affect demand for our products and treatments. Further information on potential risk factors that could affect Solta Medical's business and its financial results are detailed in its Form 10-Q for the quarter ended March 31, 2009, and other reports as filed from time to time 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. Solta Medical 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.

Web Site: http://www.Solta.com

                                Solta Medical, Inc.
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (in thousands of dollars, except share and per share data)
                                     (unaudited)

                                  Three Months Ended      Six Months Ended
                                       June 30,                June 30,
                                  2009        2008        2009        2008
                               ----------  ----------  ----------  ----------
    Net revenue                   $27,417     $17,881     $52,662     $34,112
    Cost of revenue                10,777       4,095      22,284       8,453
                               ----------  ----------  ----------  ----------
    Gross margin                   16,640      13,786      30,378      25,659
                               ----------  ----------  ----------  ----------

    Operating expenses:
    Sales and marketing             9,038       6,993      19,513      14,415
    Research and development        3,949       2,173       7,865       4,904
    General and administrative      3,452       3,046       7,770       7,598
                               ----------  ----------  ----------  ----------

        Total operating expenses   16,439      12,212      35,148      26,917
                               ----------  ----------  ----------  ----------

    Income (loss) from operations     201       1,574      (4,770)     (1,258)
    Interest and other income          41         543         302       1,146
    Interest and other expense       (104)          -        (151)          -
                               ----------  ----------  ----------  ----------

    Income (loss) before
     income taxes                     138       2,117      (4,619)       (112)
    Provision for income taxes        (53)        (78)        (71)        (86)
                               ----------  ----------  ----------  ----------

    Net income (loss)                 $85      $2,039     $(4,690)      $(198)
                               ==========  ==========  ==========  ==========

    Net income (loss)
     per share - basic              $0.00       $0.09      $(0.10)     $(0.01)
                               ==========  ==========  ==========  ==========

    Net income (loss) per
     share - diluted                $0.00       $0.08      $(0.10)     $(0.01)
                               ==========  ==========  ==========  ==========

    Weighted average shares
     outstanding used in
     calculating net income
     (loss) per share:
      Basic                    47,806,228  23,855,246  47,782,656  23,743,043
                               ==========  ==========  ==========  ==========
      Diluted                  47,920,161  24,418,630  47,782,656  23,743,043
                               ==========  ==========  ==========  ==========



                                Solta Medical, Inc.
     NON-GAAP RECONCILIATION OF GROSS MARGIN, OPERATING INCOME (L0SS), EBITDA,
                 NET INCOME (LOSS) AND NET INCOME (LOSS) PER SHARE
                  (in thousands, except share and per share data)
                                    (unaudited)

                                   Three Months Ended     Six Months Ended
                                        June 30,               June 30,
                                   2009        2008        2009        2008
                                ----------  ----------  ----------  ----------

    GAAP Gross margin             $16,640     $13,786     $30,378     $25,659
    Non-GAAP adjustments
     to gross margin:
    Purchase price related
     adjustments                    1,048           -       4,024           -
    Stock-based compensation           61          53         114          96
                               ----------  ----------  ----------  ----------
    Non-GAAP gross margin         $17,749     $13,839     $34,516     $25,755
                               ==========  ==========  ==========  ==========
    Non-GAAP gross margin as
     % of sales                       65%         77%         66%         76%
                               ==========  ==========  ==========  ==========

    GAAP income (loss) from
     operations                      $201      $1,574     $(4,770)    $(1,258)
    Non-GAAP adjustments to
     income (loss)
     from operations:
    Purchase price related
     adjustments                    1,383           -       4,675           -
    Severance expenses                  -           -         118           -
    Merger-related costs                -           -           -         969
    Stock-based compensation          864         923       1,653       1,902
                               ----------  ----------  ----------  ----------

    Non-GAAP income from
     operations                     2,448       2,497       1,676       1,613
    Depreciation expenses             670         335       1,395         666
                               ----------  ----------  ----------  ----------
    Non-GAAP EBITDA                $3,118      $2,832      $3,071      $2,279
                               ==========  ==========  ==========  ==========

    GAAP net income (loss)            $85      $2,039     $(4,690)      $(198)
    Non-GAAP adjustments
     to net income (loss):
    Purchase price related
     adjustments                    1,383           -       4,675           -
    Severance expenses                  -           -         118           -
    Merger-related costs                -           -           -         969
    Stock-based compensation          864         923       1,653       1,902
                               ----------  ----------  ----------  ----------
    Non-GAAP net income            $2,332      $2,962      $1,756      $2,673
                               ==========  ==========  ==========  ==========

    GAAP basic net income
     (loss) per share               $0.00       $0.09      $(0.10)     $(0.01)
    Non-GAAP adjustments to basic
     income (loss) per share:
    Purchase price related
     adjustments                     0.03           -        0.10           -
    Severance expenses                  -           -        0.00           -
    Merger-related costs                -           -           -        0.04
    Stock-based compensation         0.02       $0.03        0.04        0.08
                               ----------  ----------  ----------  ----------
    Non-GAAP basic net income
     per share                      $0.05       $0.12       $0.04       $0.11
                               ==========  ==========  ==========  ==========

    Non-GAAP diluted net income
     per share                      $0.05       $0.12       $0.04       $0.11
                               ==========  ==========  ==========  ==========

    GAAP weighted average shares
     outstanding used in
     calculating
     basic net income (loss)
     per share                 47,806,228  23,855,246  47,782,656  23,743,043
                               ==========  ==========  ==========  ==========

    GAAP weighted average shares
     outstanding used in
     calculating diluted net
     income (loss) per share   47,920,161  24,418,630  47,782,656  23,743,043
    Adjustments for dilutive
     potential common stock       447,282     313,718     400,552   1,105,538
                               ----------  ----------  ----------  ----------
    Weighted average shares
     outstanding used in
     calculating non-GAAP
     diluted net income
     (loss) per share          48,367,443  24,732,348  48,183,208  24,848,581
                               ==========  ==========  ==========  ==========



                               Solta Medical, Inc.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
            (in thousands of dollars, except share and per share data)
                                     (Unaudited)

                                                        June 30,  December 31,
                                                          2009        2008
                                                       ----------  ----------

                                    ASSETS
    Current assets:
      Cash and cash equivalents                           $14,615      $7,556
      Marketable investments                                4,519      17,870
      Accounts receivable, net                             13,337       5,119
      Inventories, net                                     11,365      18,304
      Prepaid expenses and other current assets             4,047       4,074
                                                       ----------  ----------

        Total current assets                               47,883      52,923
    Property and equipment, net                             6,197       6,841
    Purchased intangible assets, net                       38,899      40,999
    Goodwill                                               48,348      48,158
    Other assets                                              266         247
                                                       ----------  ----------

        Total assets                                     $141,593    $149,168
                                                       ==========  ==========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
    Liabilities:
      Accounts payable                                     $4,963      $8,080
      Accrued liabilities                                  11,685      11,085
      Accrued restructuring                                   596       3,549
      Current portion of deferred revenue                   4,134       3,658
      Short-term margin account borrowings                  3,329      12,399
      Line of credit obligation                             5,225           -
      Current portion of term loan                          1,389           -
      Customer deposits                                       346         288
                                                       ----------  ----------

        Total current liabilities                          31,667      39,059
      Deferred revenue, net of current portion                689         688
      Term loan, net of current portion                     2,359           -
      Non-current tax liabilities                           1,520       1,464
      Other  liabilities                                      314         133
                                                       ----------  ----------

        Total liabilities                                  36,549      41,344
                                                       ----------  ----------

    Stockholders' equity:
     Common stock, $0.001 par value:
      100,000,000 shares authorized
      47,852,445 and 47,758,823 shares issued
      and outstanding at June 30, 2009 and
      December 31, 2008                                        48          48
    Additional paid-in capital                            167,427     165,680
    Deferred stock-based compensation                           -         (2)
    Accumulated other comprehensive loss                      161           -
    Accumulated deficit                                   (62,592)    (57,902)
                                                       ----------  ----------

        Total stockholders' equity                        105,044     107,824
                                                       ----------  ----------

        Total liabilities and stockholders' equity       $141,593    $149,168
                                                       ==========  ==========



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SOURCE Solta Medical, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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