InMode Reports First Quarter 2020 Financial Results; Quarterly Revenues of $40.4 Million Represent 32% Year over Year Growth
YOKNEAM, Israel, May 6, 2020 /PRNewswire/ -- InMode Ltd. (Nasdaq: INMD) ("InMode"), a leading global provider of innovative medical technologies, today announced financial results for its first quarter ended March 31, 2020.
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First Quarter 2020 Highlights:
-- Quarterly revenue of $40.4 million, an increase of 32% compared to the
first quarter in 2019. In the first quarter of 2020, we derived
approximately 61% of our U.S. revenues from our proprietary surgical
technology platforms engaged in minimally invasive and subdermal
ablative treatments, 37% of our U.S. revenues from our recently
introduced Hands-Free platforms and only 2% of our U.S. revenues from
traditional laser and non-invasive RF platforms.
-- GAAP net income of $6.4 million, compared to $10.1 million in the first
quarter in 2019; *non-GAAP net income of $12.6 million, compared to
$10.5 million in the first quarter in 2019
-- GAAP diluted earnings per share of $0.15 and *non-GAAP diluted earnings
per share of $0.30
-- Total cash position of $201.7 million as of March 31, 2020, including
cash and cash equivalents, marketable securities and short-term bank
deposits
U.S. GAAP Results
(U.S. dollars in thousands, except for per share data)
---
Q1 2020
Q1 2019
---
Revenues $40,441 $30,552
---
Gross Margins 85% 86%
---
Net Income $6,433 $10,124
Attributable to InMode Ltd.
---
Earnings per
Diluted Share $0.15 $0.28
---
Non-GAAP Results
(U.S. dollars in thousands, except for per share data)
---
Q1 2020
Q1 2019
---
Net Income
Attributable
to InMode Ltd. $12,559 $10,486
---
Earnings per
Diluted Share $0.30 $0.29
---
*Please refer to "Use of non-GAAP Financial Measures" below for important information about non-GAAP financial measures. A reconciliation between U.S. GAAP and non-GAAP Statement of Income is provided following the financial statements that are included in this release. Non-GAAP results exclude stock-based compensation and related tax adjustments.
Management Comments
"The first quarter of 2020 started on a positive note as we gained momentum following the launches of our unique hands-free devices, Evolve and Evoke, along with continued demand across our product portfolio," commented Moshe Mizrahy, CEO of InMode. "However, in the beginning of March, global restrictions caused by the COVID-19 pandemic led to a standstill in sales in our industry. Despite this global economic lull, we continued to strengthen our infrastructure and product portfolio through research and development investments, furthering of regulatory processes for devices and indications worldwide, and the establishment of a wholly owned subsidiary for sales and marketing in France. Additionally, we have strengthened our supply chain in an effort to ensure stability in manufacturing capacity and inventory."
"We continued to hire experienced talent and established a virtual training and demonstration center for our customers and staff through the InMode University platform," said Mr. Shakil Lakhani, President of InMode North America.
"We remain confident in InMode's current market position and ability to further our technological innovation. We believe that our breakthrough devices, Evolve and Evoke, are well-positioned to attract both physicians and patients post-crisis, as the demand for minimally invasive and hands-free alternatives will grow, opposed to historic post-crisis declines seen with invasive surgical procedures. Therefore, we believe that these technologies will be significant growth drivers in the future and will become the standard of care for facial and body reshaping in the future," added Mr. Lakhani.
"In addition, we remain confident in InMode's current and future financial position given our market leadership, innovative approach and strong balance sheet," said Mr. Yair Malca, CFO of InMode.
COVID-19 Impact on 2020
Although the COVID-19 pandemic has caused a temporary halt in elective aesthetic surgical procedures, InMode believes that this standstill will gradually end within the coming month or two. Our assumption is based on the fact that the pandemic has reached the controlled phase:
-- There is a decrease in new cases worldwide and this downward trend is
continuing on a daily basis
-- Gradual return to work has already started
-- Elective surgeries are gradually being permitted in the USA and other
countries
Based on these assumptions, InMode believes that starting the month of June 2020 and throughout the third quarter of 2020 - InMode's business will gradually begin to pick up and return to normal. Therefore, InMode has remained positive with regards to its business prospects and has decided not to downsize the company or lay off any of its employees. On the contrary - we hired new direct salespeople around the world, and have taken advantage of the time during which we were forced to temporarily stop sales activity in order to live stream visual training to doctors and the sales team, accelerate development of platforms that fit the new aesthetic surgical market needs post COVID-19 and prepare our infrastructure for the days after.
In addition, although we have been approached by credit providers to apply for the Paycheck Protection Program (PPP), which would enable us to get funds from the government, we decided, unlike other companies in our industry, not to take, and to leave the PPP money to stimulate the U.S economy. We believe that this is our social responsibility to our customers and vendors.
We have also developed a sales program, which we will initiate after COVID-19 subsides. This program includes packages that will motivate doctors to purchase InMode platforms as part of the recovery plan for their clinics.
Throughout this crisis we have taken good care of our employees worldwide and have followed local and regional guidelines to prioritize the health and welfare of our employees and customers.
Since visibility of the future is low, InMode management decided not to give an updated detailed guidance for 2020. Currently, based on the assumptions above - our revenue outlook for the full year of 2020 will not be significantly lower than our revenue in 2019, and we will maintain a gross margin of 84%-86%.
This outlook is not a guarantee of future performance and stockholders should not rely on such forward-looking statements. See "Forward-Looking Statements" for additional information.
First Quarter 2020 Financial Results
Total revenues for the first quarter of 2020 were $40.4 million, an increase of 32% as compared to the first quarter in 2019. This revenue represents two months of normal activity and almost no activity in March (during which the world came to an economic standstill). Additionally, InMode continued to gain traction in international markets, with international revenue growing 49% year-over-year.
Gross margin for the first quarter of 2020 was 85% compared to a gross margin of 86% in the first quarter of 2019. This decrease is primarily attributable to an increase in cost of materials due to the impact of COVID-19.
GAAP operating margin for the first quarter of 2020 was 15%, compared to 33% in the first quarter of 2019. *Non-GAAP operating margin for the first quarter of 2020 was 30%, compared to 34% in the first quarter of 2019. This decrease was primarily attributable to the fact that the sales cycle in March was interrupted by COVID-19, and as a result - the marketing expenditure did not result in sales at the quarter's end.
InMode reported GAAP net income attributable to InMode Ltd. of $6.4 million, or $0.15 per diluted share in the first quarter of 2020. This is compared with GAAP net income attributable to InMode Ltd. of $10.1 million, or $ 0.28 per diluted share, in the first quarter of 2019. On a *non-GAAP basis, InMode reported net income attributable to InMode Ltd. of $12.6 million, or $0.3 per diluted share in the first quarter of 2020 compared to $10.5 million, or $0.29 per diluted share, in the first quarter of 2019.
*Please refer to "Use of non-GAAP Financial Measures" below for important information about non-GAAP financial measures. A reconciliation between U.S. GAAP and non-GAAP Statement of Income is provided following the financial statements that are included in this release. Non-GAAP results exclude stock-based compensation and related tax adjustments.
Use of Non-GAAP Financial Measures
In addition to InMode's operating results presented in accordance with GAAP, this release includes certain non-GAAP financial measures including non-GAAP net income, non-GAAP fully diluted earnings per share and non-GAAP operating margin. Because these measures are used in InMode's internal analysis of financial and operating performance, management believes that they provide greater transparency to investors of management's view of InMode's economic performance. Management also believes the presentation of these measures, when analyzed in conjunction with InMode's GAAP operating results, allows investors to more effectively evaluate and compare the performance of InMode to that of its peers, although InMode's presentation of its non-GAAP measures may not be comparable to other similarly-titled measures of other companies. Schedules reconciling each of these non-GAAP financial measures are provided as a supplement to this release. We have not provided a reconciliation of non-GAAP financial measures included in "COVID-19 Impact on 2020" to the corresponding GAAP financial measure on a forward-looking basis due to the potential variability, limited visibility and unpredictability.
Conference Call Information
Mr. Moshe Mizrahy, Chairman and Chief Executive Officer, and Mr. Yair Malca, Chief Financial Officer, will host a conference call that same day, May 6, 2020, at 8:30 a.m. Eastern Time.
To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your call five minutes before the conference call commences. If you are unable to connect using the toll-free number, please try the international dial-in number.
U.S. Toll-Free Dial-in Number: 1-866-777-2509
Israel Toll- Free Dial-in Number: 1-80-921-2373
International Dial-in Number: 1-412-317-5413
At:
8:30 a.m. Eastern Time
5:30 a.m. Pacific Time
3:30 p.m. Israel Time
The conference call will also be webcast live from a link on InMode's website at https://inmodemd.com/investors/. A replay of the conference call will be available from May 6, 2020 at 12 p.m. Eastern Time to May 20, 2020 at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:
Replay Dial-in U.S TOLL-FREE: 1-877-344-7529
Replay Dial-in Canada TOLL-FREE: 855-669-9658
Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-0088
Replay Pin Number: 10141879
A replay will also be available for 90 days on InMode's website at https://inmodemd.com/investors/
About InMode
InMode is a leading global provider of innovative medical technologies. InMode develops, manufactures, and markets devices harnessing novel radio-frequency ("RF") technology. InMode strives to enable new emerging surgical procedures as well as improve existing treatments. InMode has leveraged its medically-accepted minimally-invasive RF technologies to offer a comprehensive line of products across several categories for plastic surgery, gynecology, dermatology, otolaryngology, and ophthalmology. For more information about InMode, please visit www.inmodemd.com.
Forward-Looking Statements
The information in this press release includes forward-looking statements within the meaning of the federal securities laws. These statements generally relate to future events or InMode's future financial or operating performance, including the future performance described above under the heading titled "COVID-19 Impact on 2020". Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. In some cases, you can identify these statements because they contain words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would" and similar expressions that concern our expectations, strategy plans or intentions. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, including with respect to the impact of the COVID-19 global outbreak. As a result, actual results could differ materially from those indicated in these forward-looking statements. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in InMode's Annual Report on Form F-20 filed with the Securities and Exchange Commission on February 18, 2020, risk factors relating to the COVID-19 global outbreak and our future public filings. InMode undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
INMODE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(U.S. dollars in thousands, except for per share data)
(Unaudited)
Three months ended
March 31,
2020 2019
---
REVENUES 40,441 30,552
COST OF REVENUES 6,184 4,271
---
GROSS PROFIT 34,257 26,281
OPERATING EXPENSES:
Research and development 3,432 1,199
Sales and marketing 22,999 14,097
General and administrative 1,823 1,053
TOTAL OPERATING EXPENSES 28,254 16,349
---
INCOME FROM OPERATIONS 6,003 9,932
Finance income, net 629 403
---
INCOME BEFORE TAXES 6,632 10,335
INCOME TAXES 141 177
---
NET INCOME 6,491 10,158
Less: Net income attributable to non-controlling interests 58 34
---
NET INCOME ATTRIBUTABLE TO INMODE LTD. 6,433 10,124
---
NET INCOME PER SHARE (1):
Basic 0.19 0.38
---
Diluted 0.15 0.28
---
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
USED IN COMPUTATION OF NET INCOME PER SHARE (1)
Basic 33,963 26,818
---
Diluted 41,688 35,458
---
(1) The number shares have been adjusted retroactively for a 1-for-1.789 stock split of InMode shares by way of an issuance
of bonus shares, that occurred pursuant to a resolution of our board of directors dated July 24, 2019.
INMODE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except for per share data)
(Unaudited)
March 31, December 31,
2020 2019
---
Assets
CURRENT ASSETS:
Cash and cash equivalents 45,138 44,727
Marketable securities 126,101 120,144
Short-term bank deposits 30,470 28,491
Accounts receivable, net of
allowance for doubtful
accounts 5,769 6,628
Other receivables 5,410 3,810
Inventories 12,086 9,408
TOTAL CURRENT ASSETS 224,974 213,208
NON-CURRENT ASSETS:
Accounts receivable 337 374
Deferred income taxes, net 1,370 1,899
Operating lease right-of-
use assets 1,480 1,369
Property and equipment, net 940 935
Other investments 600 600
TOTAL NON-CURRENT ASSETS 4,727 5,177
TOTAL ASSETS 229,701 218,385
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable 4,716 3,702
Contract liabilities 13,249 15,587
Other liabilities 11,309 13,205
TOTAL CURRENT LIABILITIES 29,274 32,494
NON-CURRENT LIABILITIES:
Contract liabilities 3,206 3,813
Other liabilities 1,679 1,494
Operating lease liabilities 709 744
Deferred income taxes, net - 37
---
TOTAL NON-CURRENT
LIABILITIES 5,594 6,088
TOTAL LIABILITIES 34,868 38,582
TOTAL SHAREHOLDERS' EQUITY 194,833 179,803
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 229,701 218,385
INMODE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands, except for per share data)
(Unaudited)
Three months ended
March 31,
2020 2019
---
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 6,491 10,158
Adjustments required to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 94 63
Share-based compensation
expenses 6,050 402
Allowance for doubtful
accounts 306 59
Gains on marketable
securities, net (6)
Finance expenses (income), net 189 (183)
Deferred income taxes, net 368 (66)
Changes in operating assets and liabilities:
Decrease in accounts
receivable 590 147
Decrease (increase) in other
receivables (1,560) 873
Increase in inventories (2,678) (129)
Increase (decrease) in
accounts payable 1,014 (1,015)
Decrease in other liabilities (1,793) (449)
Increase (decrease) in
contract liabilities (2,945) 2,911
Decrease in accrued
contingencies - (10,000)
---
Net cash provided by operating
activities 6,120 2,771
---
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in short-term
deposit (16,519) (11,000)
Proceeds from short-term
deposit 14,500 5,000
Purchase of fixed assets (99) (378)
Purchase of marketable
securities (43,933) (4,918)
Proceeds from sale of
marketable securities 38,574 2,603
---
Net cash (used in) investing
activities (7,477) (8,693)
---
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of options 2,001 122
---
Net cash provided by financing
activities 2,001 122
EFFECT OF EXCHANGE RATE
CHANGES ON CASH (233) 30
---
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 411 (5,770)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 44,727 24,721
---
CASH AND CASH EQUIVALENTS AT
END OF PERIOD 45,138 18,951
---
INMODE LTD.
CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS
(U.S. dollars in thousands, except for per share data)
(Unaudited)
Three months ended
March 31,
2020 2019
--- ---
Revenues by Geography:
United States 30,823 24,085
International 9,618 6,467
---
Total Net Revenue 40,441 30,552
---
U.S. as percentage
of total revenue 76% 79%
INMODE LTD.
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF
INCOME TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(U.S. dollars in thousands, except for per share data)
(Unaudited)
Three months ended March 31, 2020 Three months ended March 31, 2019
---
GAAP Non-GAAP GAAP
Stock Based Non-GAAP
Compensation
Stock Based
Compensation
REVENUES 40,441 40,441 30,552 30,552
COST OF REVENUES 6,184 (76) 6,108 4,271 (19) 4,252
---
GROSS PROFIT 34,257 76 34,333 26,281 19 26,300
OPERATING EXPENSES:
Research and development 3,432 (1,886) 1,546 1,199 (52) 1,147
Sales and marketing 22,999 (3,838) 19,161 14,097 (308) 13,789
General and administrative 1,823 (250) 1,573 1,053 (23) 1,030
TOTAL OPERATING 28,254 (5,974) 22,280 16,349 (383) 15,966
EXPENSES
---
INCOME FROM OPERATIONS 6,003 6,050 12,053 9,932 402 10,334
Finance income, net 629 629 403 403
---
INCOME BEFORE TAXES 6,632 6,050 12,682 10,335 402 10,737
---
INCOME TAXES 141 (76) 65 177 40 217
---
NET INCOME 6,491 6,126 12,617 10,158 362 10,520
Less: Net income attributable 58 58 34 34
to non-controlling interests
---
NET INCOME 6,433 6,126 12,559 10,124 362 10,486
ATTRIBUTABLE TO
INMODE LTD.
---
NET INCOME PER
SHARE (1):
Basic 0.19 0.37 0.38 0.39
---
Diluted 0.15 0.30 0.28 0.29
---
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING USED IN
COMPUTATION OF NET
INCOME PER SHARE (1)
Basic 33,963 33,963 26,818 26,818
---
Diluted 41,688 41,809 35,458 35,409
---
(1) The number of shares have been adjusted retroactively for a 1-for-1.789 stock split of InMode shares by way of
an issuance of bonus shares, that occurred pursuant to a resolution of our board of directors dated July 24, 2019
Company Contact:
Investor Relations Contact:
Yair Malca
Miri Segal
Chief Financial Officer
MS-IR LLC
Phone: (949) 305-0108
Phone: (917) 607-8654
Email: Yair.Malca@inmodemd.com
Email: ir@inmodemd.com
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