Syneron Candela (NASDAQ:ELOS) Investor Presentation May Oppenheimer-Nasdaq Conference Tel Aviv, May 22, Injecting Energy. Changing Lives.

Transcription

1 Syneron Candela (NASDAQ:ELOS) Investor Presentation May 2016 Oppenheimer-Nasdaq Conference Tel Aviv, May 22, 2016 Injecting Energy. Changing Lives.

2 Safe Harbor For Forward Looking Statements Any statements contained in this presentation regarding future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Further, any statements that are not statements of historical fact (including statements containing "believes," "anticipates," "plans," "expects," "may," "will," "would," "intends," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and factors that could cause actual results or events to differ materially from those indicated by forward-looking statements in this presentation, including the risks set forth in Syneron Medical Ltd.'s most recent Annual Report on Form 20-F, and the other factors described in the filings that Syneron Medical Ltd. makes with the SEC from time to time. If one or more of these risks or factors materialize, or if any underlying assumptions prove incorrect, Syneron Medical Ltd.'s actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by the forward-looking statements in this presentation. Non-GAAP Financial Measures The following presentation includes certain "non-gaap financial measures" as defined in Regulation G under the Securities Exchange Act of A schedule is included in the company s Q press release, which reconciles our results as reported under General Accepted Accounting Principles and the non-gaap financial measures included in the following presentation. 2

3 Syneron Candela at a Glance A Global Leader in Medical Aesthetic Devices with 30,000 Active Customers ~$283M Revenue ¹ from capital, service and recurring sources 29% Market Share² #1 brand in the US physicians would most likely recommend to a peer 3 Diversified portfolio & pipeline in high growth markets Active in 893 ~100 granted patents and countries patent applications 1 TTM revenue 2 Based on US publicly traded companies listed here (CYNO, CUTR, ZLTQ) for 2015; Professional Aesthetic Device Sector 3 Source: Syneron proprietary survey conducted by Wizer via Nielsen's online physicians panel - Among Dermatologists, Plastic Surgeons and Medspas,

4 Our Vision To be the leading medical aesthetics company using the science of energy-tissue interaction to reveal inner beauty. 4

5 Leaders in All Aesthetic Segments Uncovering Beauty with Energy BODY SHAPING FACE & SKIN HAIR REMOVAL Fat destruction Skin laxity Cellulite reduction Circumference reduction Skin rejuvenation Tone & texture Scar reduction Tightening & volumizing Wrinkle reduction Pigmented & vascular lesions Tattoo removal Gold Standard hair removal product line for all skin and hair types 5

6 Vast Global Presence Direct Presence in 13 Countries and Active in Nearly 100 Financial Stability NA $ APAC $ EMEA $ 2015 Revenue NA 40% APAC 29% EMEA 31% Syneron-Candela Corporate HQ (Yokneam, Israel) Syneron-Candela NA HQ (Wayland, MA) Direct International Sales (US, Canada, Australia, France, Germany, Italy, Japan, Portugal, Spain, UK, China, Hong Kong, Israel) 6

7 The Market 7

8 The Global Aesthetic Market Large Unpenetrated Aesthetic Market for Syneron Candela The Global Aesthetic Market $6.6B Potential Market 2015 WW Sales of Professional Aesthetic Products; CAGR (%) $1.4B (9.2%) $1B (15%) $1.5B (8.8%) $1.6B (10.9%) $1B (8.4%) Energy Devices $2.4B Energy based devices¹ Body Shaping² & Liposuction Neurotoxins Fillers Physician Dispensed Topicals Source: Medical Insight, Inc. ¹ Includes Emerging Products ² Includes Skin Tightening 3 Excluding breast implants 8

9 New Strategic Approach 9

10 Business Evolution for Sustained Growth Business Stability with High Growth Potential Capital Equipment Service Revenue Capital Equipment Recurring Revenue Service Consumables 10

11 Long Term Business Transformation Objectives Customer Centric Business Based on a Symbiotic Relationship with Physicians Previous Years Year Outlook Double digit, accelerated YoY growth Gross Margin > 60% Double digit Operating Margin 11

12 From Investment in Infrastructure to Results 2015 HIGHLIGHTS Transitioned to two divisions: Aesthetics and Body Invested heavily in sales and marketing, in NA in particular Optimized, expanded and bifurcated salesforce Created specialty team for Profound Launched products with recurring revenue stream 2016 PLAN Execute by leveraging 2015 investments, mainly in NA Drive rapid and sustainable results (growth and profitability) Refine and scale strategy to International markets 1Q 2016 UPDATE Operating leverage improved, benefitting from growth driven by Emerging Products and initial leverage from prior investments in expanded NA sales force 12

13 Emerging Products Portfolio 13

14 Emerging Products - Our Strategic Growth Drivers Combined Revenue Models in Rapidly Growing Markets Non-invasive Fat Destruction and Body Shaping Tattoo Removal, Pigmentation and Skin Rejuvenation Skin Laxity, Loss of Volume and Submental Fat Lipolysis Women s Intimate Wellness Applications $30 Billion Non-Invasive Body Shaping Market in the US alone! $13 Billion Tattoo Removal Market in the US alone! $45 Billion Facial Treatments Market in the US alone! Billions of $ s Women s Intimate Wellness Treatments Global Market Emerging Products Portfolio in Q1 16 grew 34% YoY, representing 17% of revenues, compared to 14% in Q1 15. About half of the dollar growth coming from Body Products Portfolio, primarily driven by UltraShape sales**. * Based on Syneron Candela proprietary consumer surveys, public information and internal estimates ** The company did not report sequential growth for Q1 16 in Body Shaping revenue 14

15 Installed Base #1 Player in the World in Non-Invasive Body Shaping VelaShape 10,000 9,000 8,000 7,000 6,000 5,000 UltraShape UltraShape VContour 3.1 International launch UltraShape VContour 3.1 U.S. launch Regaining Body Shaping Market Leadership with UltraShape 4,000 3,000 2,000 1, Spearheaded the non-invasive body shaping category with VelaShape Nearly 9,000 VelaShape systems installed worldwide * Graph represents number of accumulated systems installed worldwide 15

16 The Future of Body Shaping - A Full Solution Combined approach for MORE THAN JUST FAT Attract Define Retain Refine Fat Removal Fat Destruction Skin Laxity Cellulite 16

17 Body Portfolio Unique 5C Value Proposition Comfort Comfort Unique mechanical effect for comfortable treatments Combination Therapy Comprehensive solution for fat destruction + improved skin tone and cellulite Combination Therapy 5C Coverage Coverage Faster than any other system in the industry, treating over 50% more body area per hour Cost 3x treatment ROI impacts physician s bottom line, faster Cost Customization Customization Tailor treatments to the unique contour and form of every patient 17

18 Technologies With Patient Expectations in Mind UltraShape NI Laser Lipolysis Cryolipolysis Freestyle Transducer for Customized Treatments No Signs of Treatment No pain or discomfort Full Abdomen Treatment Time: 60 mins Total Treatment Cost: $750 Multiple Fixed Applicators Leaves Untreated Ridges Visible Signs of Treatment Uncomfortable Treatments Full Abdomen Treatment Time: 90 mins Total Treatment Cost: $1200 Fixed Applicator Leaves Unnatural Dents Visible Signs of Treatment Uncomfortable Treatments Full Abdomen Treatment Time: 180 mins Total Treatment Cost: $1050 Improves Circulation Drainage Circulation and oxygenation Dermal structure New protocol = 1 treatment session 100% response rate Comfortable Treatments No downtime Non-invasive 18

19 A Bright Future Addresses a wide range of the most sought after aesthetic procedures: Tattoo Removal, Pigmentation, Skin Rejuvenation and Toning Holographic fractional technology for precision, predictability and consistency No downtime Safe and effective for all skin types Ultra-short pulse duration 785 nanometer wavelength anticipated in 2H 2016 Combined Revenue Model 19

20 Installed Base Strengthening Our Leadership in Facial Treatments 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 elos Product Line Profound >11,000 elos systems installed worldwide Profound Launch Innovative Technology for: Tightening Lifting Volumizing Profound combines efficient fat melting with strong tightening, taking advantage of the precise controlled heating of subcutaneous connective tissue and fat in the submental areas Market leadership in the widest range of face & skin solutions High end facial treatments for the most in-demand facial concerns * Graph represents number of accumulated systems installed worldwide 20

21 Profound for the Rapidly Growing Submental Market Profound single 30 min treatment of lower face and submental area (*) Fat Injections Cryolipolysis Treatment Areas Multiple face & neck areas Submental only Submental only Before treatment 3 months post treatment Applications Fat melting, skin tightening, wrinkles & texture, volumizing Fat melting Fat melting Cost to Physician $350-$450 (1 treatment) $1,500-$4,000 (4-6 treatments) $300 (2 treatments) Before treatment 3 months post treatment 100% Response rate Minimal downtime In-Office *Alexiades et al Randomized, blinded, 3-arm clinical trial assessing optimal temperature and duration for treatment with minimally invasive fractional radiofrequency. Dermatol Surg May;41(5): * Based on a 2014 survey of the ASDS of 8,315 women in the US 21

22 Women s Intimate Wellness A Rapidly Growing Need Non-Invasive Vulvovaginal Treatments Addressing a Large Potential Market Many women do not know this is an option. Once it becomes more well known it will take off like everything else aesthetic US Plastic Surgeon¹ The Aesthetic Market 25% of Plastic Surgeons 39% of Med-Spas 13% of Dermatologists Expect to increase vaginal rejuvenation & atrophy treatments in their practice over the next 3 years¹ The Gynecology Market Large unpenetrated OB:Gyn market (>40,000 physicians in the US) looking to add aesthetics to their practice Combined Revenue Model ¹ Source: Syneron proprietary survey conducted by Wizer via Nielsen's online physicians panel, among dermatologists, plastic surgeons and medspas,

23 Financial Review 23

24 Q Non-GAAP Highlights Revenue of $68.7 million, grew 8.4% y/y (9.2% in constant currency) North America grew 7.4% or 12% excluding the CoolTouch OEM business that was discontinued. EMEA grew 7.1% (8.3% in constant currency) APAC grew 10.3% (11.1% in constant currency) Gross Margin was 53.2% in Q & 2015 Operating Income was $1.8 million, up from $1.1 million y/y Operating Margin was 2.6% (3.2% in constant currency) vs. 1.8% in Q15 EPS of $0.04 vs. $0.02 y/y Cash of $72.1 million and no debt (as of 3/31/16) Completed $20 million share repurchase program Dec 2014 Feb 2016: repurchased 2,374,296 shares at an average price of $8.48 Emerging Products Highlights Grew 34% y/y* About half of the dollar growth came from the Body Shaping portfolio, primarily driven by UltraShape sales* Accounted for 17% of total revenue, up from 14% in Q Q 2016 operating leverage improved, benefitting from growth driven by Emerging Products and initial leverage from prior investments in expanded NA sales force * - The company did not report sequential growth for Q1 16 in Body Shaping revenue 24

25 5Q Trend (Non-GAAP) $K FY2014 FY2015 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Revenues 255, ,869 63,399 73,507 62,074 78,889 68,696 YOY change, % 10.2% 8.6% 11.6% 13.8% 3.0% 6.5% 8.4% Cost Of Revenue 115, ,553 29,654 33,899 26,679 34,321 32,134 Gross Profit 140, ,316 33,745 39,608 35,395 44,568 36,562 GM % 54.8% 55.2% 53.3% 53.9% 57.0% 56.5% 53.2% Total OPEX 127, ,024 32,635 36,663 34,136 41,590 34,751 % OPEX 49.8% 52.2% 51.6% 49.9% 55.0% 52.7% 50.6% EBIT 12,875 8,292 1,110 2,945 1,259 2,978 1,811 Operating Margin 5.0% 3.0% 1.7% 4.0% 2.0% 3.8% 2.6% Financial Income (expenses), net Pre Tax Income 12,187 8, ,355 1,259 2,978 1,896 Taxes on Income (tax benefit) 4,243 2, Tax rate 35% 24% 30% 27% 26% 19% 30% Net Income 7,944 6, , ,419 1,328 Avg Shares 37,160 36,739 37,328 37,384 36,672 36,051 35,021 EPS ($) FY2015 Revenue growth in constant currency: +13.4% 1Q 2016 Operating leverage improved in 1Q 16, benefitting from growth driven by Emerging Products and initial leverage from prior investments in sales and marketing and expansion of the NA sales force. 25

26 How do we see the future? 26

27 Achieve Double Digit, Accelerated YoY Revenue Growth Pipeline and Strategy Aligned to High Growth Markets 2015 Revenue Mix 2018 Revenue Mix Industry Projected Sales* CAGR 5-10% 14% 15% 71% 34% 33% 33% CAGR 15-20% CAGR 20-25% Base Products Service (as part of Base Products) Consumables Emerging Products Base Products Service (as part of Recurring Revenue with Consumables) Consumables Emerging Products Base Products Emerging Products Recurring Revenue (Consumables & Service) * Emerging Products include UltraShape, PicoWay, Profound, CO2RE Intima and a rich pipeline ¹ Internal Estimates 2015 and 2018 revenue split is a company estimate 27

28 Achieve Gross Margin > 60% Favorable Product Mix for Increased Gross Margins 2015 Revenue Mix 2018 Revenue Mix 15% 33% 14% 71% 34% 33% Base Products GMs Emerging Products GMs Recurring Revenue GMs 65-70% 70-75% 53% 55% Emerging Products include UltraShape, PicoWay, Profound, CO2RE Intima and a rich pipeline 2015 and 2018 revenue split is a company estimate 28

29 Achieve Double Digit Operating Margin Gross Margin Expansion and Operational Leverage from Infrastructure 2015 Operating Expenses (% of total revenue) 2018 Operating Expenses (% of total revenue) 2015 Operating Expenses of 53% 2018 Operating Expenses of 46% 2015 and 2018 revenue split is a company estimate 2015 and 2018 operating expenses as a percent of total revenue are estimates 29

30 Long Term Objectives of Business Transformation 2018 Revenue Mix 2018 Blended GMs >60% 2018 Operating Expenses (46% of total revenue) 33% 34% 33% Achieve double digit, accelerated YoY growth Achieve Gross Margin > 60% Achieve double digit Operating Margin * Internal Estimates Emerging Products include UltraShape, PicoWay, Profound, CO2RE Intima and a rich pipeline 2015 and 2018 revenue split is a company estimate 30

31 Our Steps to Success Double digit operating margin Operating Margin Topline Growth Markets Rapidly growing markets Product Line Diverse and differentiated proprietary product line Gross Margin High margin recurring revenue Business Model Operating leverage from business model Accelerated topline growth 31

32 Thank you.