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Form 8-K Zeltiq Aesthetics Inc For: Nov 09

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November 9, 2016 4:08 PM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2016
 
 
ZELTIQ Aesthetics, Inc.
(Exact name of registrant as specified in its charter)
  
Delaware
 
001-35318
 
27-0119051
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
4410 Rosewood Drive
Pleasanton, CA 94588
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (925) 474-2500
 
4698 Willow Road, Suite 100
Pleasanton, CA 94588
(Former name, former address and formal fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02.
Results of Operations and Financial Condition.
On November 9, 2016, ZELTIQ Aesthetics, Inc. issued a press release announcing its financial results for the third quarter of 2016. A copy of the press release is attached as Exhibit 99.1.
The information in this Item 2.02 and the related Exhibit 99.1 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. The information in this Item 2.02 and the related Exhibit 99.1 shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission.

Item 9.01. Financial Statements and Exhibits.
 
Exhibit
Number
  
Description
 
 
99.1

  
Press Release issued by ZELTIQ Aesthetics, Inc. on November 9, 2016, announcing financial results for the third quarter of 2016.




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
ZELTIQ AESTHETICS, INC.
 
 
 
Dated: November 9, 2016
 
By:
 
/s/ Sergio Garcia
 
 
 
 
Sergio Garcia
 
 
 
 
Senior Vice President, General Counsel & Secretary




EXHIBIT INDEX
 
Exhibit
Number
  
Description
 
 
99.1
  
Press Release issued by ZELTIQ Aesthetics, Inc. on November 9, 2016, announcing financial results for the third quarter of 2016.





Exhibit 99.1

 zeltiq_image1a01.jpg

ZELTIQ ANNOUNCES THIRD QUARTER 2016 FINANCIAL RESULTS



Revenue of $95.2 million, up 55% Year-over-Year

North America Account Utilization Increase of 25% Year-over-Year

Net income of $5.2 million; Adjusted EBITDA of $16.6 million or 17.4% of Revenues

Increases Full Year 2016 Revenue Guidance to a Range of $350 to $352 million




•
403 systems shipped, bringing total installed base to 5,657 systems
•
386,854 revenue cycles shipped, up 56% year-over-year
•
International revenue of $20.9 Million, up 43% year-over-year
•
Third quarter cash and investments increase of $13.1 million

PLEASANTON, CA (November 9, 2016) – ZELTIQ® , (Nasdaq: ZLTQ), a medical technology company focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform, today announced financial results for the third quarter 2016.

Mark Foley, President and Chief Executive Officer, said, “I am extremely pleased with our third quarter performance as we delivered the largest revenue quarter in the Company’s history during what is typically a seasonally slower time of year in the aesthetics industry. We experienced strong growth in both systems and consumables as the durable benefit of our direct-to-consumer or DTC campaign continued to create momentum and further solidify CoolSculpting® as the leading non-invasive, fat-reduction brand. With North America account utilization up 25% year-over-year, and over six million unique visitors to our website during the first nine months of the year, we continue to have conviction in our DTC investments and believe that we are not only generating awareness but are also beginning to condition a broader consumer base for treatment. Our international business also performed exceptionally well with revenues up 43% year-over-year as our new international management team continued to successfully execute and as we commenced our launch into the China Medical market. Importantly, the third quarter also demonstrated our ability to deliver significant profitability, as evidenced by our record Adjusted EBITDA margin, as we realized the benefit of our strategic investments.”

Mr. Foley concluded, “Overall, I am very pleased with our broad-based success in the quarter and believe that it added strong validation to our DTC strategy, international investments, and ability to deliver profitable growth. Due to our strong momentum in the market, we are increasing our full year 2016 revenue guidance to a range of $350 million to $352 million.”

Third Quarter Financial Review
Total revenue for the third quarter 2016 was $95.2 million, consisting of $42.7 million of system revenue and $52.5 million of consumable revenue. This compares to total revenue of $61.2 million, consisting of $29.3 million of system revenue and $31.9 million of consumable revenue, for the third quarter 2015. Total revenue cycles shipped increased 56% to 386,854 for the third quarter 2016, compared to 247,298 for the third quarter 2015.





Gross profit was $66.8 million, or 70.1% of revenue, for the third quarter 2016, compared to gross profit of $45.2 million, or 73.8% of revenue, for the third quarter 2015. The decrease in gross margin is mainly attributable to the increase in add-on and previously deferred applicators recognized in the third quarter of 2016, as well as increased warranty and inventory-related expense. Operating expenses for the third quarter 2016 were $55.1 million, compared to $43.2 million for the third quarter 2015.

Income from operations for the third quarter 2016 was $11.7 million, compared to income from operations of $1.9 million for the third quarter 2015. Net income for the third quarter 2016 was $5.2 million, or $0.12 per diluted share, compared to net income of $2.1 million, or $0.05 per diluted share for the third quarter 2015. Weighted average diluted shares outstanding were 41.6 million for the third quarter 2016, compared to weighted average diluted shares outstanding of 40.9 million for the third quarter 2015.

On a non-GAAP basis, the company reported adjusted EBITDA of $16.6 million, or 17.4% of revenue, for the third quarter 2016, compared to $5.6 million, or 9.2% of revenue, for the third quarter 2015.

Cash and investments were $65.0 million as of September 30, 2016, compared to $51.9 million as of June 30, 2016.

Full Year 2016 Financial Guidance
ZELTIQ is updating its financial guidance for the full year 2016, as follows:
 
•
Revenue guidance in a range of $350 million to $352 million, up from prior guidance of $340 million to $350 million.
•
Gross profit margin of approximately 70% of total revenue, compared to prior guidance of approximately 68%.
•
Operating expenses of approximately 68% of total revenue, compared to prior guidance of 66% to 67%.
•
Stock-based compensation, depreciation, and amortization expense of approximately 6% of total revenue, compared to prior guidance of 6% to 7%.
•
Net loss margin of approximately (1)% of total revenue, compared to prior guidance of (3)% to (2)%.
•
Adjusted EBITDA margin of approximately 8% of total revenue, compared to prior guidance of 7% to 9%.

In the fourth quarter of 2016, the company is moving its headquarters and vacating its existing facility. As part of this transition, the company anticipates recording a charge to account for the remaining lease liability and other related expenses. This charge is not included in financial guidance, and management currently plans to exclude it from fourth quarter adjusted EBITDA.

Additional information regarding ZELTIQ’s results and guidance can be found in ZELTIQ’s Supplemental Financial and Operational Information schedule by CLICKING HERE or by visiting the Investor Relations section of ZELTIQ’s website at www.zeltiq.com.

Conference Call
ZELTIQ will hold a conference call on Tuesday, November 8, 2016 at 1:30 p.m. PT / 4:30 p.m. ET to discuss the results. The dial-in numbers are (877) 280-7291 for domestic callers and (707) 287-9361 for international callers. The conference ID number is 1244233. A live webcast of the conference call will be available online from the investor relations page of ZELTIQ’s corporate website at www.coolsculpting.com.

A replay of the webcast will remain available on ZELTIQ’s website, www.coolsculpting.com, until ZELTIQ releases its fourth quarter 2016 financial results. In addition, a telephonic replay of the call will be available until November 15, 2016. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use the replay conference ID number 1244233.

Use of Non-GAAP Financial Measures
ZELTIQ has supplemented its GAAP net income (loss) with a non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of ZELTIQ, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP Adjusted EBITDA to GAAP net income (loss) in the most directly comparable GAAP measure is provided in the schedule below.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the ZELTIQ’s consolidated financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below.





About ZELTIQ® Aesthetics
ZELTIQ is a medical technology company focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform. ZELTIQ’s first commercial product, the CoolSculpting System, is designed to selectively reduce stubborn fat bulges. CoolSculpting is based on the scientific principle that fat cells are more sensitive to cold than the overlying skin and surrounding tissues. It utilizes patented technology of precisely controlled cooling to reduce the temperature of fat cells in the treated area, which is intended to cause fat cell elimination through a natural biological process known as apoptosis. ZELTIQ developed CoolSculpting to safely, noticeably, and measurably reduce the fat layer.

Forward-Looking Statements
The statements made in this press release regarding ZELTIQ’s full year 2016 financial guidance are forward-looking statements. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond ZELTIQ’s control and that could materially affect ZELTIQ’s actual business operations and financial performance and condition. Factors that could materially affect ZELTIQ’s business operations and financial performance and condition include, but are not limited to: less than anticipated growth in the number of physicians electing to purchase CoolSculpting systems; patient demand for CoolSculpting procedures may be lower than ZELTIQ expects; product or procedure announcements by competitors may decrease demand for CoolSculpting procedures; ZELTIQ may incorrectly estimate or control its future expenditures; ZELTIQ may incorrectly estimate the timing of new product development and new product launch; ZELTIQ’s sales and marketing plans may fail to increase sales as ZELTIQ expects; as well as those other risks and uncertainties set forth under the caption “Risk Factors” in ZELTIQ’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016, filed with the SEC on August 9, 2016. These forward-looking statements speak only as of the date of this press release. ZELTIQ expressly disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

CONTACTS:
Investor Relations:
Taylor C. Harris
ZELTIQ, Senior Vice President and CFO
925-474-2500
Nick Laudico
The Ruth Group
646-536-7030




ZELTIQ Aesthetics, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
 
September 30,
2016
 
December 31,
2015
ASSETS
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
 
$
60,369

 
$
35,710

Short-term investments
 
2,460

 
12,867

Accounts receivable, net
 
40,348

 
33,359

Inventory, net
 
32,246

 
28,095

Prepaid expenses and other current assets
 
10,286

 
11,771

Total current assets
 
145,709

 
121,802

Long-term investments
 
2,217

 
3,490

Restricted cash
 
836

 
452

Property and equipment, net
 
9,637

 
6,969

Intangible asset, net
 
4,605

 
5,092

Long-term deferred tax assets
 
32,243

 
40,475

Other assets
 
310

 
547

Total assets
 
$
195,557

 
$
178,827

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Accounts payable
 
$
16,947

 
$
10,903

Deferred revenue
 
18,708

 
7,682

Accrued and other current liabilities
 
36,769

 
34,815

Total current liabilities
 
72,424

 
53,400

Long-term deferred revenue
 
142

 
226

Other non-current liabilities
 
1,015

 
899

Total liabilities
 
$
73,581

 
$
54,525

STOCKHOLDERS’ EQUITY:
 
 
 
 
Total stockholders’ equity
 
121,976

 
124,302

Total liabilities and stockholders’ equity
 
$
195,557

 
$
178,827





ZELTIQ Aesthetics, Inc.
Condensed Consolidated Statement of Operations
(In thousands, except share and per share data)
(Unaudited)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
September 30,
 
September 30,
 
 
2016
 
2015
 
2016
 
2015
Revenue
 
$
95,157

 
$
61,202

 
$
249,091

 
$
177,191

Cost of revenue
 
28,407

 
16,041

 
74,161

 
48,535

Gross profit
 
66,750

 
45,161

 
174,930

 
128,656

Operating expenses:
 
 
 
 
 
 
 
 
Research and development
 
6,488

 
5,464

 
19,096

 
17,352

Sales and marketing
 
40,336

 
30,647

 
131,330

 
87,253

General and administrative
 
8,270

 
7,115

 
27,538

 
22,156

Total operating expenses
 
55,094

 
43,226

 
177,964

 
126,761

Income (expense) from operations
 
11,656

 
1,935

 
(3,034
)
 
1,895

Interest income (expense), net
 
7

 
13

 
(49
)
 
40

Other income (expense), net
 
498

 
359

 
2,553

 
(508
)
Income (loss) before income taxes
 
12,161

 
2,307

 
(530
)
 
1,427

Provision for income taxes
 
6,972

 
160

 
9,053

 
231

Net income (loss)
 
$
5,189

 
$
2,147

 
$
(9,583
)
 
$
1,196

Basic and diluted net income (loss) per share:
 
 
 
 
 
 
 
 
Net income (loss) per share, basic
 
$
0.13

 
$
0.06

 
$
(0.24
)
 
$
0.03

Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic
 
39,745,125

 
38,881,183

 
39,510,075

 
38,640,269

Net income (loss) per share, diluted
 
$
0.12

 
$
0.05

 
$
(0.24
)
 
$
0.03

Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted
 
41,592,568

 
40,860,593

 
39,510,075

 
40,724,261



 
 





ZELTIQ Aesthetics, Inc.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
 
 
 
Nine Months Ended
 
 
September 30,
 
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income (loss)
 
$
(9,583
)
 
$
1,196

Adjustments to reconcile net loss to net cash provided by operating activities:

 
 
 
 
Depreciation and amortization
2,468

 
1,712

Stock-based compensation
12,805

 
10,261

Deferred income taxes
8,232

 
—

Amortization of investment premium, net
30

 
63

Provision for (reduction in) doubtful accounts receivable
(242
)
 
270

Provision for excess and obsolete inventory
1,314

 
403

Loss on disposal and write-off of property and equipment
174

 
—

Gain on foreign currency exchange rates
 
(2,005
)
 
—

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
 
(6,925
)
 
(11,773
)
Inventory
 
(5,928
)
 
(13,698
)
Prepaid expenses and other assets
 
1,617

 
(1,794
)
Deferred revenue, net of deferred costs
 
11,002

 
1,681

Accounts payable, accrued and other liabilities
 
8,472

 
17,573

Net cash provided by operating activities
 
21,431

 
5,894

CASH FLOWS FROM INVESTING ACTIVITIES:

 
 
 
 
Purchase of investments
 
(2,963
)
 
(12,079
)
Proceeds from sale of investments
 
8,683

 
—

Proceeds from maturity of investments
 
5,950

 
18,260

Purchase of property and equipment
 
(4,970
)
 
(2,332
)
Change in restricted cash
 
(421
)
 
94

Net cash provided by investing activities
 
6,279

 
3,943

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Principal payments on capital leases
 
(93
)
 
(89
)
Proceeds from issuance of common stock upon exercise of stock options and from employee stock purchase plan
 
2,935

 
4,136

Tax payments related to shares withheld for vested restricted stock units
 
(5,271
)
 
(6,577
)
Tax effect of employee stock plans
 
(29
)
 
26

Net cash used in financing activities
 
(2,458
)
 
(2,504
)
Effect of exchange rate changes on cash and cash equivalents
 
(593
)
 
(364
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
 
24,659

 
6,969

CASH AND CASH EQUIVALENTS—Beginning of period
 
35,710

 
28,649

CASH AND CASH EQUIVALENTS—End of period
 
$
60,369

 
$
35,618





ZELTIQ Aesthetics, Inc.
Reconciliation of Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation,
Amortization and Stock-Based Compensation (Adjusted EBITDA)
(In thousands, except for percentages)
(Unaudited)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
September 30,
 
September 30,
Dollars
 
2016
 
2015
 
2016
 
2015
Net income (loss), as reported
 
$
5,189

 
$
2,147

 
$
(9,583
)
 
$
1,196

Adjustments to net income (loss):
 
 
 
 
 
 
 
 
Interest (income) expense and other, net
 
(505
)
 
(372
)
 
(2,504
)
 
468

Provision for income taxes
 
6,972

 
160

 
9,053

 
231

Depreciation and amortization
 
946

 
650

 
2,468

 
1,712

Stock-based compensation expense
 
3,983

 
3,028

 
12,805

 
10,261

Total adjustments to net income (loss)
 
11,396

 
3,466

 
21,822

 
12,672

Adjusted EBITDA
 
$
16,585

 
$
5,613

 
$
12,239

 
$
13,868

 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
September 30,
 
September 30,
As a Percentage of Revenue
 
2016
 
2015
 
2016
 
2015
Net income (loss)
 
5.5
 %
 
3.5
 %
 
(3.8
)%
 
0.7
%
Adjustments to net income (loss):
 
 
 
 
 
 
 
 
Interest (income) expense and other, net
 
(0.5
)%
 
(0.6
)%
 
(1.0
)%
 
0.2
%
Provision for income taxes
 
7.2
 %
 
0.3
 %
 
3.6
 %
 
0.1
%
Depreciation and amortization
 
1.0
 %
 
1.1
 %
 
1.0
 %
 
1.0
%
Stock-based compensation expense
 
4.2
 %
 
4.9
 %
 
5.1
 %
 
5.8
%
Total adjustments to net income (loss)
 
11.9
 %
 
5.7
 %
 
8.7
 %
 
7.1
%
Adjusted EBITDA margin
 
17.4
 %
 
9.2
 %
 
4.9
 %
 
7.8
%
 
As a Percentage of Revenue
 
FY2016 Guidance
Net loss
 
(1
)%
Adjustments to net loss:
 
 
Interest income and other, net
 
(1
)%
Provision for income taxes
 
4
 %
Depreciation and amortization
 
1
 %
Stock-based compensation expense
 
5
 %
Total adjustments to net loss
 
9
 %
Adjusted EBITDA margin
 
8
 %




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