Attached files
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| 8-K - Q4 FORM 8K - Obagi Medical Products, Inc. | form8k_2009q4.htm |
Contact:
Preston
Romm
CFO, EVP
of Finance, Operations and Administration
Obagi
Medical Products, Inc.
562.628.1007
Or:
Ina
McGuinness/Lena Adams
ICR,
Inc.
310.954.1100
OBAGI MEDICAL
PRODUCTS’ FOURTH QUARTER 2009 REVENUE INCREASED 21% AND NET INCOME MORE THAN
DOUBLED TO $4.8 MILLION
Long Beach, Calif. — March 11, 2010 — Obagi Medical Products, Inc. (NASDAQ: OMPI) today
reported net revenue for the fourth quarter ended December 31, 2009 rose 21% to
$30.7 million, from $25.4 million in the fourth quarter of 2008. The
increase was due primarily to increased consumer and account confidence in the
economy, international growth and higher product demand in advance of a January
1, 2010 price increase. Domestic and international sales represented
approximately 81% and 19% of fourth quarter revenue,
respectively.
Net
income for the fourth quarter of 2009 rose 120% to $4.8 million, or $0.22 per
share, from $2.2 million, or $0.10 per share, a year ago.
Gross
margin for the fourth quarter of 2009 was 78.9% compared with 80.2% for the
fourth quarter of 2008, due primarily to lower license revenue. This
was partially offset by an increase in product sales, particularly of Nu-Derm,
which benefited from the success of the third quarter promotional rebate
program.
Total
operating expenses for the fourth quarter of 2009 declined 7% to $16.3 million,
from $17.5 million a year ago as a result of cost cutting measures.
Business
Highlights of the Fourth Quarter:
|
·
|
Net
revenue of $30.7 million is the highest quarterly revenue in the Company’s
history, an increase of 23% from the third quarter 2009 and up 21% from a
year ago.
|
|
·
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International
product revenue was $4.6 million, an increase of 54% from a year
ago.
|
|
·
|
U.S.
product revenue was $25.0 million, an increase of 19% from a year
ago.
|
|
·
|
Added
350 new accounts during the fourth quarter, bringing the domestic active
accounts to 6,199 as of December 31, 2009, an increase of 9%
year-over-year.
|
2009
Financial Results
For
the year ended December 31, 2009:
|
·
|
Total
revenue was relatively flat at $104.1 million, compared with $104.6
million in 2008, as a $2.1 million decline in domestic revenue was
partially offset by a $1.8 million, or a 14% increase in international
product revenue.
|
|
·
|
Gross
margin was 78.8% compared with 80.9% for 2008. The decline was primarily
related to increased promotional activity designed to support physician
practices and the Company’s decision to exit the pharmacy channel in the
second quarter.
|
|
·
|
Net
income was $11.3 million, or $0.51 per fully diluted share, compared with
$12.6 million, or $0.56 per fully diluted share for
2008.
|
|
·
|
As
of December 31, 2009, the Company was debt free with cash, cash
equivalents and short term investments totaling $36.0 million, compared
with $19.9 million at December 31, 2008. For 2009, free cash
flow totaled $18.0 million and cash from operations reached $18.9
million.
|
As
previously disclosed, included in the total year results were contract
termination costs and an inventory write off associated with the Company’s April
13, 2009 decision to cease selling the SoluCLENZ™ product line and exit the
pharmacy channel. These amounts included a $440,000 pre-tax inventory
write off (included within cost of goods sold) and $769,000 for pre-tax costs
associated with the termination of related contracts (included within SG&A
expenses). Adjusting for these termination related costs, non-GAAP
net income was $12.1 million, or $0.55 per fully diluted
share. Please refer to the table below for a reconciliation of GAAP
net income to non-GAAP net income for the year ended December 31,
2009.
“I’m
very pleased with the results for the fourth quarter and our overall performance
for the year, maintaining revenue and profit levels to 2008, increasing active
accounts by 9% and generating $18 million of free cash flow. These
are positive signs that support our belief that the market is recovering and
that we will see further improvement in growth trends in 2010. Our priorities
for 2010 include implementing initiatives that will expand our customer base,
improve patient and account retention, continue our international growth and
launch new products,” said Steve Carlson, Chief Executive Officer of
Obagi.
Financial
Guidance
Based
on current trends in its core business, the impact of the January 1, 2010 price
increase and normal seasonality, which typically causes a weaker first quarter
compared to the rest of the year, the Company expects first quarter 2010 net
revenue to be in the range of $23.5 million to $24.5 million and fully diluted
earnings per share to be in the range of $0.08 to $0.09. For the
year, Obagi expects revenue to be between $108 and $112 million and net income
to be between $0.67 and $0.71 per share on a fully diluted basis of
approximately 22.2 million shares outstanding.
Discussion
of Non-GAAP Financial Measures
Obagi
Medical believes that the presentation of non-GAAP net income and non-GAAP net
income per share provides important supplemental information to management and
investors about financial and business trends relating to the Company’s
financial condition and results of operations. For further information regarding
why Obagi Medical believes that these non-GAAP measures provide useful
information to investors, the specific manner in which management uses these
measures, and some of the limitations associated with the use of these measures,
please refer to the Company’s Current Report on Form 8-K filed today with the
SEC. The Form 8-K is available on the SEC’s website at www.sec.gov or under the
“SEC Filings” tab of the Investor Relations section of Obagi Medical’s
website.
Conference
Call Information
Obagi
Management will host an investor conference call today at 4:30 p.m. Eastern time
(1:30 p.m. Pacific time). Investors interested in participating in the live call
can dial 877-941-4774 from the U.S. International callers can dial 480-629-9760.
A telephone replay will be available approximately two hours after the call
concludes through Thursday, March 25, by dialing 800-406-7325 from the U.S., or
303-590-3030 for international callers, and entering confirmation code 4236212.
There also will be a simultaneous webcast available on the Investor Relations
section of the Company's web site at www.obagi.com. For those unable to
participate during the live broadcast, the webcast will be archived for 30
days.
About Obagi Medical Products,
Inc. (www.obagi.com)
Obagi
Medical Products is a specialty pharmaceutical company that develops, markets
and sells, and is a leading provider of, proprietary topical aesthetic and
therapeutic prescription-strength skin care systems in the physician-dispensed
market. Using its Penetrating Therapeutics™ technologies, Obagi
Medical's products are designed to improve penetration of agents across the skin
barrier to treat the most common and visible skin conditions in adults including
premature aging, photodamage, hyperpigmentation (irregular or patchy
discoloration of the skin), acne, sun damage, rosacea, and soft tissue deficits,
such as fine lines and wrinkles. The history of Obagi Medical's
skin care product introductions is as follows: Obagi Nu-Derm®, 1988; Obagi-C® Rx
(the first prescription-strength vitamin C and hydroquinone system), 2004;
Obagi® Professional-C (a line of highly stable vitamin C serums), 2005; Obagi
Condition & Enhance™ for use with cosmetic procedures to enhance patient
outcomes and satisfaction, 2006; Obagi ELASTIderm® eye treatment and Obagi
CLENZIderm® M.D. acne therapeutic systems, 2007; Obagi ELASTIderm® Décolletage
System, 2008; the Obagi Rosaclear® System for
rosacea, 2009; and Refissa™ Tretinoin Emollient Cream,
0.05%, 2009.
Forward
Looking Statements
There
are forward-looking statements contained in this press release and the related
investor conference call that can be identified by the use of
forward-looking terminology such as the words “believes,” “expects,” “may,”
“will,” “should,” “potential,” “anticipates,” “plans,” or “intends” and similar
expressions. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, events or
developments to be materially different from the future results, events or
developments indicated in such forward-looking statements. Such factors include,
but are not limited to, the current condition of, and continued deterioration
in, the global economy, intense competition our products face and will face in
the future, the level of market acceptance of our products, the possibility that
our products could be rendered obsolete by technological or medical advances,
the possibility that we may become involved in intellectual property claims and
other litigation that could adversely affect the
profitability
of or our ability to sell our products, the possibility that our products may
cause undesirable side effects and the fact that our ability to commercially
distribute our products may be significantly harmed if the state or federal
regulatory environment governing our products changes. A more detailed
discussion of these and other factors that could affect our results is contained
in our filings with the U.S. Securities and Exchange Commission. These factors
should be considered carefully and readers are cautioned not to place undue
reliance on such forward-looking statements. No assurance can be given that the
future results covered by the forward-looking statements will be achieved. The
forward-looking statements in this release and the related investor conference
call speak only as of the date they are made and Obagi Medical Products does not
intend to update this information.
Obagi®,
Obagi-C®, Obagi CLENZIderm®, ELASTIderm®, Nu-Derm®, Rosaclear®, Condition &
Enhance™ and SoluCLENZ™ are among the trademarks of Obagi Medical Products, Inc.
and/or its affiliates in the United States and certain other countries.
Refissa™ is a trademark of Spear Pharmaceuticals Inc. Any other
trademarks or trade names mentioned are the property of their respective
owners.
# # #
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Obagi
Medical Products, Inc.
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Consolidated Balance
Sheets
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(Dollars
in thousands, except share and per share amounts)
|
||||||||
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December
31,
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2009
|
2008
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|||||||
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Assets
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(unaudited)
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|||||||
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Current
assets
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||||||||
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Cash
and cash equivalents
|
$ | 30,215 | $ | 13,938 | ||||
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Short-term
investments
|
5,743 | 6,000 | ||||||
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Accounts
receivable, net of allowance for doubtful accounts
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||||||||
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and
sales returns of $2,025 and $1,238 as of December 31, 2009
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||||||||
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and
2008, respectively
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24,240 | 20,648 | ||||||
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Accounts
receivable from related parties, net of allowance for
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||||||||
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doubtful
accounts of $0 and $169 as of December 31, 2009
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||||||||
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and
2008, respectively
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97 | 518 | ||||||
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Inventories,
net
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6,228 | 6,845 | ||||||
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Deferred
income taxes
|
1,379 | 1,501 | ||||||
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Prepaid
expenses and other current assets
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2,424 | 2,832 | ||||||
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Income
taxes receivable
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730 | 2,071 | ||||||
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Total
current assets
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71,056 | 54,353 | ||||||
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Property
and equipment, net
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4,689 | 5,340 | ||||||
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Goodwill
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4,629 | 4,629 | ||||||
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Intangible
assets, net
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4,936 | 5,267 | ||||||
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Deferred
income taxes
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1,835 | 1,855 | ||||||
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Other
assets
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345 | 815 | ||||||
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Total
assets
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$ | 87,490 | $ | 72,259 | ||||
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Liabilities
and Stockholders' Equity
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||||||||
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Current
liabilities
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||||||||
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Accounts
payable
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$ | 7,864 | $ | 6,478 | ||||
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Current
portion of long-term debt
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18 | 47 | ||||||
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Accrued
liabilities
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4,801 | 3,510 | ||||||
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Income
taxes payable
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1,159 | - | ||||||
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Amounts
due to related parties
|
105 | 169 | ||||||
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Total
current liabilities
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13,947 | 10,204 | ||||||
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Long-term
debt
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- | 18 | ||||||
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Other
long-term liabilities
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1,555 | 1,516 | ||||||
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Total
liabilities
|
15,502 | 11,738 | ||||||
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Commitments
and contingencies
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||||||||
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Stockholders'
equity
|
||||||||
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Common
stock, $.001 par value; 100,000,000 shares authorized,
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||||||||
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22,748,218
and 22,691,238 shares issued and 21,912,857
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||||||||
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and
22,044,872 shares outstanding at December 31, 2009
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23 | 23 | ||||||
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and
2008, respectively
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||||||||
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Additional
paid-in capital
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59,505 | 58,026 | ||||||
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Accumulated
earnings
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17,890 | 6,557 | ||||||
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Treasury
stock, at cost; 811,031 and 627,367 shares at
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||||||||
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December
31, 2009 and 2008, respectively
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(5,348 | ) | (4,016 | ) | ||||
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Accumulated
other comprehensive loss
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(82 | ) | (69 | ) | ||||
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Total
stockholders' equity
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71,988 | 60,521 | ||||||
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Total
liabilities and stockholders' equity
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$ | 87,490 | $ | 72,259 | ||||
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Obagi
Medical Products, Inc.
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Consolidated Statements
of Income
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(Dollars
in thousands, except share and per share amounts)
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||||||||||||||||
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Three
Months Ended December 31,
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Year
Ended December 31,
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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(unaudited)
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(unaudited)
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Net
sales
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$ | 30,703 | $ | 25,435 | $ | 104,096 | $ | 104,593 | ||||||||
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Cost
of sales
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6,487 | 5,043 | 22,039 | 19,931 | ||||||||||||
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Gross
profit
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24,216 | 20,392 | 82,057 | 84,662 | ||||||||||||
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Selling,
general and administrative expenses
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15,372 | 16,120 | 59,222 | 59,380 | ||||||||||||
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Research
and development expenses
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915 | 1,412 | 4,407 | 5,284 | ||||||||||||
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Income
from operations
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7,929 | 2,860 | 18,428 | 19,998 | ||||||||||||
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Interest
income
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26 | 89 | 173 | 368 | ||||||||||||
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Interest
expense
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(70 | ) | (150 | ) | (123 | ) | (243 | ) | ||||||||
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Income
before provision for income taxes
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7,885 | 2,799 | 18,478 | 20,123 | ||||||||||||
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Provision
for income taxes
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3,080 | 615 | 7,145 | 7,535 | ||||||||||||
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Net
income
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$ | 4,805 | $ | 2,184 | $ | 11,333 | $ | 12,588 | ||||||||
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Net
income attributable to common shares
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||||||||||||||||
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Basic
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$ | 0.22 | $ | 0.10 | $ | 0.52 | $ | 0.56 | ||||||||
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Diluted
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$ | 0.22 | $ | 0.10 | $ | 0.51 | $ | 0.56 | ||||||||
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Weighted
average common shares outstanding
|
||||||||||||||||
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Basic
|
21,912,743 | 22,438,451 | 21,970,491 | 22,598,474 | ||||||||||||
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Diluted
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22,125,175 | 22,439,806 | 22,022,132 | 22,607,689 | ||||||||||||
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Segment
information:
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Three
Months Ended December 31,
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Year
Ended December 31,
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2009
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2008
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2009
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2008
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(unaudited)
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(unaudited)
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Net
sales by segment
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Physician
Dispensed
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$ | 29,612 | $ | 24,026 | $ | 99,466 | $ | 99,776 | ||||||||
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Licensing
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1,091 | 1,409 | 4,630 | 4,817 | ||||||||||||
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Net
sales
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$ | 30,703 | $ | 25,435 | $ | 104,096 | $ | 104,593 | ||||||||
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Gross
profit by segment
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||||||||||||||||
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Physician
Dispensed
|
$ | 23,180 | $ | 19,016 | $ | 77,575 | $ | 79,979 | ||||||||
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Licensing
|
1,036 | 1,376 | 4,482 | 4,683 | ||||||||||||
|
Gross
profit
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$ | 24,216 | $ | 20,392 | $ | 82,057 | $ | 84,662 | ||||||||
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Geographic
information
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||||||||||||||||
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United
States
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$ | 24,963 | $ | 21,006 | $ | 85,432 | $ | 87,516 | ||||||||
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International
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5,740 | 4,429 | 18,664 | 17,077 | ||||||||||||
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Net
sales
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$ | 30,703 | $ | 25,435 | $ | 104,096 | $ | 104,593 | ||||||||
|
Three Months
Ended December 31,
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Year
Ended December 31,
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|||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
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(unaudited)
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(unaudited)
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Net
sales by product line
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||||||||||||||||
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Physician
Dispensed
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||||||||||||||||
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Nu-Derm
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$ | 17,028 | $ | 14,405 | $ | 56,057 | $ | 58,378 | ||||||||
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Vitamin
C
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3,716 | 2,994 | 12,428 | 12,380 | ||||||||||||
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Elasticity
|
2,763 | 2,141 | 9,491 | 11,643 | ||||||||||||
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Therapeutic
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2,078 | 1,546 | 8,668 | 6,260 | ||||||||||||
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Other
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4,027 | 2,940 | 12,822 | 11,115 | ||||||||||||
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Total
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29,612 | 24,026 | 99,466 | 99,776 | ||||||||||||
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Licensing
|
1,091 | 1,409 | 4,630 | 4,817 | ||||||||||||
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Total
net sales
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$ | 30,703 | $ | 25,435 | $ | 104,096 | $ | 104,593 | ||||||||
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Reconciliation
between net income on a GAAP basis to a non-GAAP basis is included below
(unaudited):
|
||||
|
Year
Ended
|
||||
|
December
31, 2009
|
||||
|
GAAP
net income
|
$ | 11,333 | ||
|
a)
SoluCLENZ inventory write-off
|
440 | |||
|
b)
SoluCLENZ charges & termination costs
|
769 | |||
|
c)
Non-GAAP income tax benefit
|
(462 | ) | ||
|
Non-GAAP
net income
|
$ | 12,080 | ||
|
Non-GAAP
net income per share:
|
||||
|
Basic
|
$ | 0.55 | ||
|
Diluted
|
$ | 0.55 | ||
|
Shares
used in computing Non-GAAP per share amounts:
|
||||
|
Basic
|
21,970,491 | |||
|
Diluted
|
22,022,132 | |||