InMode Reports Second Quarter 2020 Financial Results; Quarterly Revenues of $30.8 Million, GAAP and *Non-GAAP Diluted Earnings per Share of $0.21 and $0.24
YOKNEAM, Israel, Aug. 5, 2020 /PRNewswire/ -- InMode Ltd. (Nasdaq: INMD) ("InMode"), a leading global provider of innovative medical technologies, today announced consolidated financial results for its second quarter ended June 30, 2020.
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Second Quarter 2020 Highlights:
-- Quarterly revenue of $30.8 million, a decrease of 21% compared to the second quarter of 2019; approximately 53% of U.S. quarterly revenues derived from our proprietary surgical technology platforms engaged in minimally invasive and subdermal ablative treatments, approximately 46% of U.S. quarterly revenues derived from our recently introduced hands-free platforms and approximately 1% derived from our traditional laser and non-invasive RF platforms -- GAAP net income of $8.6 million, compared to $15.8 million in the second quarter of 2019; *non-GAAP net income of $10.1 million, compared to $16.1 million in the second quarter of 2019 -- GAAP diluted earnings per share of $0.21 compared to $0.45 in the second quarter of 2019; *non-GAAP diluted earnings per share of $0.24 compared to $0.45 in the second quarter of 2019 -- Total cash position of $203.4 million as of June 30, 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) --- Q2 2020 Q2 2019 --- Revenues $30,765 $38,797 --- Gross Margins 85% 87% --- Net Income Attributable to InMode Ltd. $8,588 $15,797 --- Earnings per Diluted Share $0.21 $0.45 --- *Non-GAAP Results (U.S. dollars in thousands, except for per share data) --- Q2 2020 Q2 2019 --- Net Income Attributable to InMode Ltd. $10,096 $16,081 --- Earnings per Diluted Share $0.24 $0.45 --- *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 share-based compensation and related tax adjustments.
Management Comments
"The second quarter of 2020 was both challenging and encouraging. In June, after three months of global shutdowns relating to the global COVID-19 pandemic, elective surgeries began to come back throughout the United States and internationally, and aesthetic surgeons re-opened their clinics, which allowed for one month of sales and marketing operation in the quarter. Our continued commitment to the welfare of employees and customers, and our decision not to downsize our sales and marketing organization during the shutdown, unlike some of our competitors, proved to be instrumental in allowing us to act quickly and continue to capture market share," commented Moshe Mizrahy, InMode's CEO.
"During the quarter, we leveraged our InMode University platform for securing customer relationships, strengthening our brand, training our experienced sales team and physicians on InMode's hands-free technology and platforms, and ultimately generating sales as restrictions loosened. Given our commitment to the future, we continued to invest in our direct marketing and sales organization," commented Shakil Lakhani, President of North America.
"In addition, we made progress in our clinical and regulatory processes internationally. In June, we were excited to receive the Health Canada certification for Evolve Tone, which is Canada's first and only all-in-one hands-free device consisting of three unique body remodeling technologies- Tite, Trim and Tone. Furthermore, in July, we received clearance from the China National Medical Products Administration (NMPA) for two proprietary InMode RF platforms, which we believe is a significant milestone as we continue to expand our global footprint," noted Dr. Spero Theodorou, InMode's Chief Medical Officer.
"As we continue to build out our organization in a safe and conscientious manner, we believe our unique and innovative R&D pipeline for our product portfolio will attract both physicians and patients post-crisis, as the desire for minimally invasive and hands-free alternatives is expected to move to the forefront of consumer decision-making," added Dr. Michael Kreindel, InMode's Chief Technology Officer.
2020 Guidance
We expect that our revenue for the full year of 2020 will be between $156-$160 million, and we intend to 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.
Second Quarter 2020 Financial Results
Total revenues for the second quarter of 2020 were $30.8 million, a decrease of 21% as compared to the second quarter of 2019. The decrease in revenue was primarily due to the impact of the global COVID-19 pandemic, in which the U.S. market had significantly reduced activity during the economic standstill and shutdowns in April and May. Nonetheless, InMode continued to gain traction in international markets, with international revenue growing 10% year-over-year.
Gross margin for the second quarter of 2020 was 85% compared to a gross margin of 87% in the second quarter of 2019. This decrease is primarily attributable to the expansion of our operations team, as well as an increase in the cost of certain parts and materials due to the impact of the global COVID-19 pandemic.
GAAP operating margin for the second quarter of 2020 was 26%, compared to 41% in the second quarter of 2019. *Non-GAAP operating margin for the second quarter of 2020 was 30%, compared to 42% in the second quarter of 2019. This decrease was primarily attributable to the sales cycle in April and May being interrupted by the global COVID-19 pandemic, and as a result, marketing expenditure did not translate into sales during those months.
InMode reported GAAP net income attributable to InMode Ltd. of $8.6 million, or $0.21 per diluted share in the second quarter of 2020 compared to $15.8 million, or $0.45 per diluted share, in the second quarter of 2019. On a *non-GAAP basis, InMode reported net income attributable to InMode Ltd. of $10.1 million, or $0.24 per diluted share in the second quarter of 2020 compared to $16.1 million, or $0.45 per diluted share, in the second quarter of 2019.
"Our strong balance sheet, profitable business model and positive cashflow, which continued to be present throughout the COVID-19 crisis, has been one of InMode's main strengths and competitive advantages, and has allowed us to continue our growth momentum in the United States and internationally," noted Yair Malca, InMode's CFO.
*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 share-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 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.
Conference Call Information
Mr. Moshe Mizrahy, Chairman and Chief Executive Officer, Dr. Michael Kreindel, co-founder and Chief Technology Officer, Mr. Yair Malca, Chief Financial Officer, Mr. Shakil Lakhani, President of North America, and Dr. Spero Theodorou, Chief Medical Officer, will host a conference call today, August 5, 2020, at 8:30 a.m. Eastern Time to discuss the second quarter 2020 financial results.
The Company encourages participants to pre-register for the conference call using the following link: http://dpregister.com/10145846. Callers will receive a unique dial-in upon registration, which enables immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.
For callers that opt out of pre-registration, please dial one of the following teleconferencing numbers. Please begin by placing your call ten 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/events-presentations/. A replay of the conference call will be available from August 5, 2020 at 12 p.m. Eastern Time to August 12, 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: 10145846
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 "2020 Guidance". 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.
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
INMODE LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (U.S. dollars in thousands, except for per share data) (Unaudited) Three months ended Six months ended June 30, June 30, --- 2020 2019 2020 2019 --- REVENUES 30,765 38,797 71,206 69,349 COST OF REVENUES 4,695 4,875 10,879 9,146 GROSS PROFIT 26,070 33,922 60,327 60,203 OPERATING EXPENSES: Research and development 1,816 1,584 5,248 2,783 Sales and marketing 14,536 15,898 37,535 29,995 General and administrative 1,613 713 3,436 1,766 TOTAL OPERATING EXPENSES 17,965 18,195 46,219 34,544 INCOME FROM OPERATIONS 8,105 15,727 14,108 25,659 Finance income, net 636 382 1,265 785 INCOME BEFORE TAXES 8,741 16,109 15,373 26,444 INCOME TAXES 161 274 302 451 NET INCOME 8,580 15,835 15,071 25,993 Add: Loss (net income) attributable to non-controlling interests 8 (38) (50) (72) NET INCOME ATTRIBUTABLE TO INMODE LTD. 8,588 15,797 15,021 25,921 NET INCOME PER SHARE (1): Basic 0.24 0.58 0.43 0.96 Diluted 0.21 0.45 0.36 0.73 --- WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF NET INCOME PER SHARE (1) Basic 35,943 26,963 34,956 26,891 --- Diluted 41,733 35,344 41,709 35,334 --- (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) June 30, December 31, 2020 2019 --- Assets CURRENT ASSETS: Cash and cash equivalents 64,767 44,727 Marketable securities 106,668 120,144 Short-term bank deposits 31,971 28,491 Accounts receivable, net of allowance for doubtful accounts 8,608 6,628 Other receivables 5,327 3,810 Inventories 16,227 9,408 TOTAL CURRENT ASSETS 233,568 213,208 NON-CURRENT ASSETS: Accounts receivable 383 374 Deferred income taxes, net 993 1,899 Operating lease right-of-use assets 1,413 1,369 Property and equipment, net 1,061 935 Other investments 600 600 TOTAL NON-CURRENT ASSETS 4,450 5,177 TOTAL ASSETS 238,018 218,385 Liabilities and shareholders' equity CURRENT LIABILITIES: Accounts payable 4,026 3,702 Contract liabilities 10,283 15,587 Other liabilities 13,503 13,205 TOTAL CURRENT LIABILITIES 27,812 32,494 NON-CURRENT LIABILITIES: Contract liabilities 2,447 3,813 Other liabilities 1,836 1,494 Operating lease liabilities 660 744 Deferred income taxes, net 107 37 TOTAL NON-CURRENT LIABILITIES 5,050 6,088 TOTAL LIABILITIES 32,862 38,582 TOTAL SHAREHOLDERS' EQUITY 205,156 179,803 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 238,018 218,385
INMODE LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands, except for per share data) (Unaudited) Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 --- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 8,580 15,835 15,071 25,993 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 105 74 199 137 Share-based compensation expenses 1,160 412 7,210 814 Allowance for doubtful accounts 160 19 466 78 Gains on marketable securities, net (3) (9) - Finance expenses (income), net 79 (126) 268 (309) Deferred income taxes, net 458 (77) 826 (143) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable (3,045) 1,580 (2,455) 1,727 Decrease (increase) in other receivables 63 291 (1,497) 1,164 Increase in inventories (4,141) (524) (6,819) (653) Increase (decrease) in accounts payable (690) 1,085 324 70 Increase in other liabilities 2,323 465 530 16 Increase (decrease) in contract liabilities (3,725) (533) (6,670) 2,378 Decrease in accrued contingencies (10,000) Net cash provided by operating activities 1,324 18,501 7,444 21,272 --- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in short-term deposit (15,090) (6,090) (31,609) (17,090) Proceeds from short-term deposit 13,590 5,000 28,090 10,000 Purchase of fixed assets (226) (86) (325) (464) Purchase of marketable securities (34,376) (9,421) (78,309) (14,339) Proceeds from sale of marketable securities 53,712 2,000 92,286 4,603 --- Net cash provided by (used in) investing activities 17,610 (8,597) 10,133 (17,290) --- CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of options 549 15 2,550 137 --- Net cash provided by financing activities 549 15 2,550 137 EFFECT OF EXCHANGE RATE CHANGES ON CASH 146 7 (87) 37 --- NET INCREASE IN CASH AND CASH EQUIVALENTS 19,629 9,926 20,040 4,156 CASH AND CASH EQUIVALENTS AT BEGINNING OF 45,138 18,951 44,727 24,721 PERIOD --- CASH AND CASH EQUIVALENTS AT END OF PERIOD 64,767 28,877 64,767 28,877 ---
INMODE LTD. CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS (U.S. dollars in thousands, except for per share data) (Unaudited) Three months ended Six months ended June 30, June 30, --- 2020 2019 2020 2019 --- Revenues by Geography: United States 24,060 32,721 54,883 56,806 International 6,705 6,076 16,323 12,543 --- Total Net Revenue 30,765 38,797 71,206 69,349 --- U.S. as percentage of total revenue 78% 84% 77% 82%
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 June 30, 2020 Three months ended June 30, 2019 --- GAAP Share Based Compensation Non-GAAP GAAP Share Based Compensation Non-GAAP --- REVENUES 30,765 30,765 38,797 38,797 COST OF REVENUES 4,695 (149) 4,546 4,875 (22) 4,853 --- GROSS PROFIT 26,070 149 26,219 33,922 22 33,944 OPERATING EXPENSES: Research and development 1,816 (122) 1,694 1,584 (56) 1,528 Sales and marketing 14,536 (757) 13,779 15,898 (309) 15,589 General and administrative 1,613 (132) 1,481 713 (25) 688 TOTAL OPERATING EXPENSES 17,965 (1,011) 16,954 18,195 (390) 17,805 --- INCOME FROM 8,105 1,160 9,265 15,727 412 16,139 OPERATIONS Finance income, net 636 636 382 382 --- INCOME BEFORE TAXES 8,741 1,160 9,901 16,109 412 16,521 --- INCOME TAXES (TAX 161 (348) (187) 274 128 402 BENEFIT) --- NET INCOME 8,580 1,508 10,088 15,835 284 16,119 Add: Loss (net income) 8 8 (38) (38) attributable to non-controlling interests --- NET INCOME 8,588 1,508 10,096 15,797 284 16,081 ATTRIBUTABLE TO INMODE LTD. --- NET INCOME PER SHARE (1): Basic 0.24 0.28 0.58 0.59 --- Diluted 0.21 0.24 0.45 0.45 --- WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF NET INCOME PER SHARE (1) Basic 35,943 35,943 26,963 26,963 --- Diluted 41,733 42,009 35,344 35,429 --- (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
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) Six months ended June 30, 2020 Six months ended June 30, 2019 --- GAAP Share Based Non-GAAP GAAP Share Based Compensation Compensation Non-GAAP --- REVENUES 71,206 71,206 69,349 69,349 COST OF REVENUES 10,879 (225) 10,654 9,146 (41) 9,105 --- GROSS PROFIT 60,327 225 60,552 60,203 41 60,244 OPERATING EXPENSES: Research and development 5,248 (2,008) 3,240 2,783 (108) 2,675 Sales and marketing 37,535 (4,595) 32,940 29,995 (617) 29,378 General and administrative 3,436 (382) 3,054 1,766 (48) 1,718 TOTAL OPERATING EXPENSES 46,219 (6,985) 39,234 34,544 (773) 33,771 --- INCOME FROM 14,108 7,210 21,318 25,659 814 26,473 OPERATIONS Finance income, net 1,265 1,265 785 785 --- INCOME BEFORE TAXES 15,373 7,210 22,583 26,444 814 27,258 --- INCOME TAXES (TAX 302 (424) (122) 451 168 619 BENEFIT) --- NET INCOME 15,071 7,634 22,705 25,993 646 26,639 Add: Loss (net income) (50) (50) (72) (72) attributable to non-controlling interests --- NET INCOME 15,021 7,634 22,655 25,921 646 26,567 ATTRIBUTABLE TO INMODE LTD. --- NET INCOME PER SHARE (1): Basic 0.43 0.65 0.96 0.98 --- Diluted 0.36 0.54 0.73 0.75 --- WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF NET INCOME PER SHARE (1) Basic 34,956 34,956 26,891 26,891 --- Diluted 41,709 41,922 35,334 35,423 --- (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
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SOURCE InMode Ltd.