BURLINGTON, Mass., May 1 /PRNewswire-FirstCall/ -- Palomar Medical Technologies, Inc. (Nasdaq: PMTI), a leading researcher and developer of light-based systems for cosmetic treatments, today announced financial results for the first quarter ended March 31, 2008. Revenues for the quarter ended March 31, 2008 were $23.0 million, of which $17.7 million were product revenues. Royalty revenues were $3.2 million, of which $682,000 related to the recognition of the remaining portion of back-owed royalties associated with the Alma Lasers, Ltd. settlement agreement. Funded development revenues were $597,000. Other revenues were $1.5 million related to a payment of $1.25 million under the non-exclusive license agreement with The Procter & Gamble Company for home-use, light-based hair removal devices for women and the recognition of the remaining portion of trade dress infringement fees associated with the Alma Lasers, Ltd. settlement agreement of $248,000. First quarter gross margin from product revenues was 63%. Product gross margin was negatively affected by lower product revenues which resulted in lower overhead absorption. Loss before taxes for the first quarter ended March 31, 2008 was $1.8 million, which included approximately $2.4 million in legal expenses related to the Candela lawsuits and certain other adjustments as shown below.
The Company reported net loss of $1.0 million, or $0.05 per share for the first quarter of this year and net income of $5.9 million, or $0.30 per diluted share for the first quarter of 2007. Non-GAAP net income for the quarter ended March 31, 2008, which includes adjustments for back-owed royalty revenues, trade dress infringement fees, cost of back-owed royalty revenues, investment banking fees related to an international distributor agreement, FAS 123R compensation charge, interest on back-owed royalties, and non-cash taxes, resulted in $1.6 million, or $0.09 per diluted share. Please refer to the financial statements included in this news release for a reconciliation of GAAP results to non-GAAP results for the three months ended March 31, 2008 and 2007.
The Company's balance sheet continues to be strong and includes $128.0 million in cash and marketable securities. The Company reclassified approximately $21.4 million of its marketable securities to non-current assets due to the recent illiquidity in the auction-rate securities market. The Company has the intent and ability to hold these investments to maturity.
Chief Executive Officer Joseph P. Caruso commented, "We are disappointed with the revenues generated this quarter in North America. A slowdown in the economy seems to be a factor in delaying the buying decisions of our customer base, especially those new to the market. We believe, however, that the use of light-based devices for aesthetic treatments is an excellent opportunity for growth and we are positioned well to capitalize on this opportunity in the future with leading edge professional products, consumer product offerings on the horizon, and a strong intellectual property portfolio. During the quarter, we also launched our laser-assisted lipolysis Aspire Body Sculpting platform. This novel technology addresses the fastest growing segment of our market, fat reduction, and rounds out our product offering to both existing and new customers. We are targeting the first shipments of this new system during the third quarter."
Use of Non-GAAP Financial Measures
To supplement Palomar's consolidated financial statements presented in accordance with GAAP, this news release uses the following measures defined as non-GAAP financial measures by the SEC: non-GAAP income before taxes, non-GAAP provision for income taxes, non-GAAP net income, and non-GAAP diluted earnings per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. In addition, the non-GAAP financial measures included in this news release may be different from, and therefore not comparable to, similar measures used by other companies. For more information on these non-GAAP financial measures, please see the non-GAAP data included below. This data has more details of the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. Palomar's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business operating results. Palomar believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Palomar's performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Palomar's historical performance and our competitors' operating results. Palomar believes that these non-GAAP measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.
Conference Call: As previously announced, Palomar will conduct a conference call and webcast today at 11:30 AM Eastern Time. Management will discuss financial results and strategic matters. If you would like to participate, please call (866) 770-7051 or listen to the webcast in the Investor Relations section of the Company's website at www.palomarmedical.com. The telephone replay will be available one hour after the call at (888) 286-8010 passcode 38414246 and will be available for fourteen days. A webcast replay will also be available.
About Palomar Medical Technologies Inc: Palomar is a leading researcher and developer of light-based systems for cosmetic treatments. Palomar pioneered the optical hair removal field, when, in 1997, it introduced the first high-powered laser hair removal system. Since then, many of the major advances in light-based hair removal have been based on Palomar technology. In December 2006, Palomar became the first company to receive a 510(k) over-the- counter (OTC) clearance from the United States Food and Drug Administration (FDA) for a new, patented, home-use, light-based hair removal device. OTC clearance allows the product to be marketed and sold directly to consumers without a prescription. There are now millions of light-based cosmetic procedures performed around the world every year in physician offices, clinics, spas and salons. Palomar is testing many new and exciting applications to further advance the hair removal market and other cosmetic applications. Palomar is focused on developing proprietary light-based technology for introduction to the mass markets. Palomar has granted The Procter & Gamble Company a non-exclusive License Agreement to certain patents, technology and FDA documents related to the home-use, light-based hair removal field for women. In addition, Palomar has an exclusive development and license agreement with Johnson & Johnson Consumer Companies to develop and potentially commercialize home-use, light-based devices for reducing or reshaping body fat including cellulite, reducing the appearance of skin aging, and reducing or preventing acne.
For more information on Palomar and its products, visit Palomar's website at www.palomarmedical.com. To continue receiving the most up-to-date information and latest news on Palomar as it happens, sign up to receive automatic e-mail alerts by going to the Investor Relations' section of the website.
With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements, including, but not limited to, statements relating to new markets, future royalty amounts due from third parties, development and introduction of new products, and financial and operating projections. These forward-looking statements are neither promises nor guarantees, but involve risk and uncertainties that may individually or mutually impact the matters herein, and cause actual results, events and performance to differ materially from such forward-looking statements. These risk factors include, but are not limited to, results of future operations, technological difficulties in developing or introducing new products, the results of future research, lack of product demand and market acceptance for current and future products, the effect of economic conditions, challenges in managing joint ventures and research with third parties and government contracts, the impact of competitive products and pricing, governmental regulations with respect to medical devices, including whether FDA clearance will be obtained for future products and additional applications, the results of litigation, difficulties in collecting royalties, potential infringement of third-party intellectual property rights, factors affecting the Company's future income and resulting ability to utilize its NOLs, and/or other factors, which are detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended December 31, 2007 and the Company's quarterly reports on Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
SOURCE Palomar Medical Technologies, Inc.