Leadership in Aesthetic Medicine

Leadership in Aesthetic Medicine
September 2006
Nasdaq: ELOS
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Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Specifically, statements concerning Syneron's
financial expectations regarding expenditures and financial results the 2006 fiscal year, as well
as statements concerning new product introductions, FDA submissions, distribution plans, and
maintaining Syneron's competitive advantage are forward-looking statements within the
meaning of the safe harbor provisions of the Act. Estimates of financial results and other
forward-looking statements are based on management's current, preliminary expectations and
are subject to risks and uncertainties detailed from time to time in Syneron’s filing with the
SEC, which may cause Syneron's actual results to differ materially from the statements
contained herein. Undue reliance should not be placed on forward-looking statements. Syneron
undertakes no obligation to update publicly any forward-looking statements to reflect new
information, events or circumstances after the date they were made, or to reflect the occurrence
of unanticipated events
Nasdaq: ELOS
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Syneron, 2001-present:
Recognition and Fast Penetration
‰ Technology: elōs (electro-optical synergy)
‰ IP: 6 patents granted, 15 pending
‰ Products: broadest portfolio in industry
‰ Market share: Close to 15% in USA and Worldwide
‰ Profitability: 84+% gross margin, 41+% net margin
‰ Financial position: $148m cash, zero debt
(over $100M created from operations)
Nasdaq: ELOS
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The Technology
Nasdaq: ELOS
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From Lasers to elōsTM – 3rd Generation Technology
1970
Lasers
1990
1995
Intense
Pulsed
Light
2000
elōsTM
Conducted RF
Light
The goal of energy based non-invasive
treatments is to penetrate through the skin
and apply enough energy to selected area
without damaging healthy tissue
1980
Epidermis
Dermis
What is ELOS
¾ Light (IPL or Laser) and conducted RF
are simultaneously applied to the skin
¾ Light Pre-Heats target and increases its
conductivity
¾ RF selectively reaches targets due to
higher conductivity of hot tissue
Subdermal Fat
& Collagen
Nasdaq: ELOS
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elōs – Synergy of Energies
•
Skin texture
•
Wrinkle
•
Acne
•
Pigmented lesions
•
Hair
•
Vascular lesions
•
Cellulite and fat
Epidermis
Dermis
Subdermal Fat
& Collagen
Nasdaq: ELOS
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Advantages of elōs technology
‰Medical
Proof:
More than 40 peer-reviewed
clinical papers
‰ Superior, repeatable results
‰ Enhanced safety
‰Marketing/Business
model
Proof:
Rapid ROI to doctors - typical
Syneron customer recoups
initial investment in 12-18 mth
‰ No consumables
‰ Low rate insurance & financing
‰ Guaranteed depot service
Proof:
gross margins = 84%
(20-30% above industry)
Leads to net margins = 41-4%
‰Profitability
‰ Significantly lower COGs
‰ Lower cost for service &
maintenance
Nasdaq: ELOS
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Competitive Financial analysis (FY 2005):
Syneron (1)
Industry Average (2)
Gross Margins
87%
59%
(54%)
S,G&A
33%
35%
(36%)
R&D
6%
8%
(7%)
EBIT
48%
16%
(11%)
Net Profit
51%
14%
(7%)
(1)
(2)
Syneron’s results are proforma, excluding one-off costs associated with the secondary offering and Thermage settlement
Industry results are based on publicly listed companies: bold numbers exclude Lumenis, numbers in italics include Lumenis
Nasdaq: ELOS
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The Market
Nasdaq: ELOS
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Market Drivers
¾ Baby boomers still turning 50
¾ Increased public awareness and acceptance of
non-invasive cosmetic procedures
¾ Appealing business model for doctors (GP and
ObGyn) under pressure from insurance and
capping of traditional business
¾ Safer and easier to use technology opens up the
market to non-medical professionals (mostly out
of USA)
Nasdaq: ELOS
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Addressable Market
$800m capital equipment market expected to grow
~20% over next 5 years
500,000
(# of Potential Users)
150,000
495,000
150,000
Addressable
400,000
market
has grown from 300,000
300,000
50,000 potential
users in the mid 90’s
to more than
300,000
500,000 potential
users now
345,000
300,000
200,000
300,000
100,000
150,000
150,000
45,000
45,000
0
Physician
Market
(derm/plast
only)
Physician
Market
(inc. other
MDs)
45,000
Spa /
Paramedical
Market
Source: Medical Insights Inc. – Michael Moretti
Nasdaq: ELOS
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Total
dermatologists/plastic surgeons
other physician specialties
spa/paramedical
Operations
Nasdaq: ELOS
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Strong Global Sales & Marketing Network
Los Angeles
Chicago
Munich
(Europe / Middle
East HQ)
Toronto
(North American HQ)
Corporate Headquarters
Regional Headquarters
Distribution Center
Regional Sales Office
N. America
• 55 direct sales
reps in 6 US
territories +
Canada
• Dedicated reps
to medical spas
and institutional
buyers
• Service centers
in Los Angeles
and Chicago
Nasdaq: ELOS
Yokneam, Israel
(Corporate HQ)
Europe / Middle East
•
•
•
•
Hong Kong
(Asia / Pacific HQ)
Corporate HQ
•
Direct sales in
Germany
(reps)
Distributors in
the rest of
Europe and
the Middle
East
Regional sales
managers
Service Center
•
•
•
•
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R&D and
Engineering
Center
Service Center
Manufacturing
and Logistics
Corporate
Finance
South America
and South
Africa
Asia - Pacific
•
•
•
Management
of distributors
in 11 countries
Regional sales
managers
Service center
Product Initiatives: Realigning the Product Line
the new “e-line”
• eLight
• eLaser
• eMax
Nasdaq: ELOS
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Syneron product portfolio treats all in-demand
applications with increased functionality
– eLight: complete elōs Facial Solution including
• skin rejuvenation, acne
• superficial vascular and pigmented lesions
• Skin tightening and wrinkle reduction with new
ReFirme procedure
– eLaser
• ultrafast hair removal
• Leg vein treatment
• Skin rejuvenation
– eMax
• a complete aesthetic elōs workstation, including
ReFirme procedure with new ST applicator
– Velasmooth
• first FDA cleared medical device for the
treatment of the appearance of cellulite
Nasdaq: ELOS
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R&D Initiatives
Nasdaq: ELOS
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New Product Initiatives: Home Use Products
¾
Completed first clinical study of prototype device for
skin rejuvenation
¾
Hair removal and cellulite home use prototypes are in
development
¾
Syneron established a new division dedicated to the
development and commercialization of aesthetic
products for consumer home use
¾
Exploring strategic partnerships with major consumer
product companies and cosmetic suppliers
Nasdaq: ELOS
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New Product Initiatives:
Body shaping/Non-invasive fat treatment
¾
New elōs-based technology and platform
for non-invasive fat treatment and body
sculpting
¾
FDA submission expected in 2007
Nasdaq: ELOS
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New Product Initiatives:
Spa and non-MD professionals
¾ The elōs technology has major price, safety and efficacy
advantages critical for the aesthetician/spa market
¾ Launched new product line at Cosmoprof (Bologna, Italy)
in April 2006. Excellent acceptance
¾ Establish new division to sell to aestheticians, beauty
salons, and non-med spas
Nasdaq: ELOS
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New Product Initiatives: Development of Dental
Laser Market through “Light Instruments“
¾
Completed first testing of
prototype dental laser
¾
Proprietary technology
enables lighter, highly
effective product with
beneficial cost structure
lighTouch in clinical trials
¾
Establishing dedicated marketing team for Light Instrument
products … plus cross-selling opportunities
¾
FDA clearance expected end of 2006
Nasdaq: ELOS
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Financials
Nasdaq: ELOS
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Financial Highlights:
¾ Installed base of over 5,000 units, rate of 600+ per quarter
¾ Significant revenue growth, expected 30-35% growth in 2006
¾ High gross margin of 84%+, 20-30% above competition
¾ Consistent profitability of 41 to 44%+ net margins
¾ 0% tax on operations benefiting from approved enterprise status
¾ Clean balance sheet, cash of $148m (79% of assets)
¾ No debt, equity of $167m (88% of balance)
Nasdaq: ELOS
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Worldwide installed base of Syneron
platforms
6000
5000
4000
3000
2000
1000
0
2001
Nasdaq: ELOS
2002
2003
2004
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2005
2006-1H
Track Record of Revenue Growth Across All
Markets
$87.4m
90
80
70
$57.9m
60
50
North American Sales
40
$35m
3
International Sales
30
20
10
$11.5m
$0.5m
0
2002
Nasdaq: ELOS
2003
2004
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2005
…And a Focus on Profitability
45
40
35
30
25
20
15
10
5
0
-5
$44.6m
$27.3m
$14.4m
-$0.2m $2.7m
2001
2002
2003
2004
2005
Note: Excludes charges related to Lumenis litigation, Thermage settlement, and secondary offering
Nasdaq: ELOS
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P&L Highlights (1H: 1-6 / 2006)
Non GAAP
FAS 123R
Sales
Cost of Goods
Gross profit
$51,257
(7,821)
$43,436
100.0%
R&D
M&S
G&A
Subtotal Exp.
($3,728)
(17,161)
(2,837)
($23,726)
(7.3%)
Opp. Prof/(Loss)
Finance & Other
Tax Asset Dep.
Net Income
Avg Shares (diluted)
EPS
Nasdaq: ELOS
$19,710
$2,457
($509)
$21,658
GAAP
100.0%
(113)
($113)
$51,257
(7,934)
$43,323
($3,986)
(19,869)
(3,724)
($27,579)
(7.8%)
(46.3%)
($258)
(2,708)
(887)
($3,853)
38.5%
($3,966)
$15,744
(15.3%)
84.7%
(33.5%)
(5.5%)
$2,457
($509)
4.8%
(1.0%)
42.3%
27,576
$0.79
26
($3,966)
$17,692
27,576
($0.15)
27,576
$0.64
(15.5%)
84.5%
(38.8%)
(7.3%)
(53.8%)
30.7%
4.8%
(1.0%)
34.5%
Balance Sheet Highlights (June 30, 2006)
Assets
Liabilities
Cash & Equivalent
$147.4 m
78%
Trade Receivables
$29.7 m
16%
Bank Loans
$0.0 m
0%
Other Recivables
$4.5 m
2%
Trade Payables
$3.5 m
2%
Inventories
$3.8 m
2%
Other liabilities
$14.6 m
8%
Current Assets
$185.4 m
98%
Current Assets
$18.1 m
10%
Severance Pay
$0.3 m
0%
Severance Pay
$0.3 m
0%
Long-term deposits
$1.1 m
1%
Deferred Revenue
$4.0 m
2%
LT Trade Receivables
$0.0 m
0%
Long Term Liabilities
$4.3 m
2%
Other Assets
$1.0 m
1%
Fixed Assets
$1.3 m
1%
Shareholders' Equity:
$166.7 m
88%
Long Term Assets
$3.7 m
2%
Total Liabilities & Equity $189.1 m
100%
Total Assets
Nasdaq: ELOS
$189.1 m
100%
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Summary
Nasdaq: ELOS
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Syneron’s Value Proposition
¾ A leader in a fast growing market
¾ The highest gross and net margins
¾ Most innovative R&D initiatives
¾ Expanding into new large and growing markets
¾ Very strong balance sheet
Nasdaq: ELOS
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NASDAQ: ELOS
Nasdaq: ELOS
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