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Sales up strongly at Lumenis

13 May 2014

Revenues grow 10 per cent in Israeli medical laser firm’s first quarter following Nasdaq listing.

Lumenis, the medical laser company that recently floated on the US stock market, has posted strong financial results for its first quarter trading as a public company.

Revenues of $65.8 million were up 9.5 per cent year-over-year, said the Yokneam, Israel, company, although a one-off payment of $4 million to Bank Hapoalim that was related to the initial public offering (IPO) on the Nasdaq exchange dragged it to a net loss of $3.1 million.

However, adjusted profit figures, which ignore that and other charges, showed that quarterly net income had more than doubled from the previous year to reach $2.2 million, with $3.1 million added to the company’s net cash pile from trading.

CEO Tzipi Ozer-Armon said: "We are pleased with our operating performance and financial results, highlighted by strong revenue growth and continued improvement in gross margins and profitability."

She is particularly excited about the launch of products including the ‘LightSheer’ line for hair removal and the Lumenis Pulse 120H, a new system for urology applications that dramatically reduces nucleation procedure times and is said to eliminate bleeding in patients undergoing the procedure.

Early clinical trials with the more powerful holmium source are said to be going well in the UK, and generating some excitement in the urology community. Clearly enthused about the new laser, Ozer-Armon described it as a “wonderful product” in the firm’s first investor conference call since the Nasdaq listing.

Recent US Food & Drug Administration (FDA) clearance and CE mark approval in Europe for the Pulse 120H system also bodes well for the future, although it will likely be next year before it makes any significant impact on the company’s sales figures.

Balance sheet boost
The CEO added that the proceeds from the recent IPO have provided the capital required for future investment in the business.

The Lumenis balance sheet now shows the impact of that listing. As of March 31, the company held just under $115 million in cash and equivalents – up from $42.8 million a year ago. Following debt restructuring in recent years, the company also now lists $17.3 million in current and $51.5 million in long-term liabilities.

Revenue growth in the quarter was driven primarily by Lumenis’ two largest business segments, which cover aesthetic and surgical laser applications. Aesthetic applications showed the most rapid rate of growth, at 22 per cent, thanks to some early adoption of its new products - for example the new portable and upgradable “LightSheer”, which is said to be 75 per cent faster than other its rivals.

Surgical sales grew at just under 5 per cent, with a new CO2 laser for ear, nose and throat (ENT) procedures that can be switched electronically between fiber and free-space delivery said to be doing well. The Pulse 120H gives urologists a single platform capable of performing four major urological procedures, and the company is currently planning more than 30 physician training courses around the world this year to drive the sales of the holmium laser system.

Growth strategy
In the company’s third major application sector, ophthalmics, sales were down slightly from last year. But the FDA approved the “Array LaserLink” pattern scanning device for multi-spot laser photocoagulation at the end of calendar 2013, and Lumenis has just begun commercialization efforts in Japan.

“The early market response in Japan for this new scanning device has been very positive, where ophthalmologists have expressed enthusiasm particularly about the shorter treatment time and reduced patient discomfort,” Lumenis said.

The company’s management now expects revenues to come within the narrow range of $282 million to $285 million for the full year, and if they are correct that would represent an increase of between 6.3 per cent and 7.4 per cent on 2013 – suggesting a more muted rate of growth for the rest of the year.

Profits are also expected to rise sharply, but Lumenis’ stock fell by around 5 per cent in early trading following the update, and at $9.50 is down around a quarter from its IPO launch price of $12.15.

The company says that it is pursuing a growth strategy based on geographical expansion – it has hired an additional 60 sales people over the past year – and the launch of at least one new product platform per year in its three main application sectors.

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