Syneron CEO: 2015 was a year of investment

Amit Meridor  photo: Eyal Yitzhar

Amit Meridor says that despite heavy investment in marketing, the company still made a reasonable profit.

"We had a quarter with peak revenue, and sales of our two main growth engines grew nicely," Amit Meridor, CEO of aesthetic medicine company Syneron Medical Ltd. (Nasdaq: ELOS) saystoday. The company reported its fourth quarter results, with revenue in line withits guidanceand outperforming market estimates, and profit equaling estimates.

Sales of the growth engines cited by Meridor, the ultrashape slimming product in the US and its PicoWay tattoo removal product, generated $16.2 million and $18.7 million in revenue, respectively. "What is special about these products is their significantly higher-than-average gross profit margins. We finished the year with a 55.2% gross profit margin, and the rate for these two products is over 70%. In the long term, we want to achieve a 60% gross profit rate," he says.

The switch to a model of renewable supplies in which every doctor using Syneron's machine pays for both the machine and the equipment for each use is also expected to contribute to the company's profit. "This model gives us a good basis for the future. In the past, we sold machines at a good price, but we earned nothing beyond this sale price. The change in our business is not free of charge; we're investing in a sales team that assists the doctor," Meridor says.

The main investment in the marketing and sales setup took place in 2015, and was reflected in its results, with a lower non-GAAP profit, in comparison with 2014. The top line was up 6.5% to $78.9 million in the fourth quarter, and up 8.6% to $278 million for the year.

Fourth quarter net profit

Synernon made a $2 million GAAP-based net profit in the fourth quarter, compared with a $4.1 million net loss in the corresponding quarter in 2014. The company's loss for all of 2015 grew 21.9% to $6.3 million.

"We had a $15 million positive cash flow in the fourth quarter," saysMeridor "We declared that 2015 would be a year of investment, building our sales network in the US, and investing in marketing in order to support the change in our business. We nonetheless maintained a reasonable level of profit, in comparison with 2014."

Published by Globes [online], Israel business news - www.globes-online.com - on February 22, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Amit Meridor  photo: Eyal Yitzhar
Amit Meridor photo: Eyal Yitzhar
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