Syneron Medical Achieves 65% Growth in Sales and 217% Growth in Net Pr

Syneron Medical Achieves 65% Growth in Sales and 217% Growth in Net Profit in FY2004

    Business Editors/Health Editors
    BIOWIRE2K

    YOKNEAM, Israel--(BUSINESS WIRE)--Feb. 7, 2005--Syneron Medical Ltd. (Nasdaq:ELOS), an innovator in the development, marketing and sales of ELOS(TM) combined-energy medical aesthetic devices, today announced fiscal year and fourth quarter financial results for the period ending December 31, 2004. Revenues for the fiscal year 2004 were $57.9 million, a 65% increase over the $35.0 million recorded for fiscal year 2003. Net income for the twelve months was $27.3 million, or $1.14 per diluted share, compared to net income of $8.6 million, or $0.42 per diluted share, reported in 2003.
    The Company's revenues for the fourth quarter of 2004 were $17.5 million, a 47% increase compared to $11.9 million recorded in the last quarter of 2003. Net income for the fourth quarter was $8.2 million, ($0.30 per diluted share), representing a 583% increase compared to net income of $1.2 million ($0.06 per diluted share) reported in the same period last year.
    2004 was a landmark year in which Syneron established itself as a global leader in aesthetic medical devices, due to its achievements on a number of fronts:

--	Rapid growth in sales: Syneron sold more than 1,300 platforms in 2004, compared with sales of 800 platforms in 2003. In the 3 years since Syneron commenced sales, the Company has sold more than 2,300 platforms demonstrating the medical community's endorsement of the safety and efficacy of Syneron's ELOS technology.
--	Creation of broadest product portfolio: With the launch of the Comet(TM) and VelaSmooth(TM) systems in 2004, Syneron succeeded in building the broadest product portfolio in the aesthetic devices industry. The Syneron portfolio currently consists of six platforms covering a wide range of aesthetic procedures, from permanent hair reduction and skin rejuvenation, to wrinkle reduction and the treatment of pigmented and vascular lesions, leg veins, acne, and cellulite.
--	Global marketing and sales network expansion: During 2004, Syneron's sales network expanded to cover 41 countries (compared to 30 countries in 2003) through our subsidiaries and 35 distributors. Syneron has developed solid strategic partnerships with its distributors, whereby Syneron strongly supports marketing, clinical and technical operations of its distributors worldwide.
--	Accelerated growth in revenues, outstripping market growth: Syneron revenues grew 65% in 2004, far higher than the 20% estimated market growth.
--	Outstanding profitability achievements: In 2004, Syneron reported four quarters with gross margin above 85%, with a net profit margin of over 45%. These margins are a direct result of Syneron's technology, outsourcing manufacturing efficiencies, and distinctive business model for support and maintenance that significantly reduce the cost of goods sold.

    Based on the factors mentioned above, Syneron is raising its revenue guidance for FY2005 to $78-$80 million, from $75 million, representing a 35-38% increase over 2004. Guidance for Q1, 2005 has been set at $17-$18 million.
    "The R&D, operations, sales and marketing teams, along with our strategic partners in manufacturing and global distribution, have achieved excellent results in the four years since Syneron was founded," said Moshe Mizrahy, CEO of Syneron Medical. "Our capture of the market leadership position during 2004 is a direct result of the synergy created by the teams' combined efforts. Through the same unique level of teamwork, we will continue our momentum in introducing new products and opening new markets in order to maintain our competitive advantage in the non-invasive medical aesthetic industry."

    Conference call

    Syneron Management will host a conference call to discuss the results and quarterly highlights at 10:00 ET today, February 7, 2005. To access the conference call, please dial one of the following numbers: US: 1 (800) 387 6216, International: +1 416 405 9328.
    A webcast of the conference call will be accessible on the Syneron Medical website at www.syneron.com. A replay of the webcast will also be available on Syneron's website.

    About Syneron

    Syneron Medical Ltd. (Nasdaq:ELOS) manufactures and distributes medical aesthetic devices that are powered by the proprietary, patented ELOS combined-energy technology of Bi-Polar Radio Frequency and Light. The Company's innovative ELOS technology provides the foundation for highly effective, safe and cost-effective systems that enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications including hair removal, wrinkle reduction, rejuvenating the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. is located in Israel. Syneron has offices and distributors throughout the world (http://syneron.com/locations.html), including North American Headquarters in Canada, European Headquarters in Germany, and Asia-Pacific Headquarters in Hong Kong, which provide sales, service and support. Additional information can be found at www.syneron.com.

    Forward-Looking Statements

    This press release 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 financial results for the 2005 fiscal year and the first quarter of 2005, as well as statements concerning new product introductions, opening new markets, and maintaining Syneron's competitive advantage are forward-looking statements within the meaning of the safe harbor provisions of the Act. Estimates of year-end and quarterly financial results are subject to a number of assumptions regarding the future operation of Syneron's business. Forward-looking statements are based on management's current, preliminary expectations and are subject to known and unknown risks and uncertainties, which may cause Syneron's actual results to differ materially from the statements contained herein. Some of these risks are: market acceptance of our products; our ability to develop and commercialize new products; changes in relationships with manufacturers and suppliers; the impact of competitive products; risks relating to the development and regulatory approval of new products; the ability to protect intellectual property rights; third party claims of infringement. These and other factors are identified and more fully explained under the heading "Risk Factors" in Syneron's prospectus filed on August 5, 2004 with the Securities and Exchange Commission prior to its initial public offering. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date such statements are made. 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.

Syneron Medical Ltd. Soltam Technology Park P.O.B. 550 Yokneam Illit, 20692 Israel Tel: +972 4 909-6200 Fax: +972 4 909-6202 info@syneron-med.com

    Syneron, the Syneron logo, ELOS, Comet, and VelaSmooth are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. ELOS (Electro-Optical Synergy) is a proprietary technology of Syneron Medical. All other names are the property of their respective owners.

SYNERON MEDICAL LTD. CONSOLIDATED STATEMENT OF OPERATIONS U.S. dollars in thousands except per share data

Year ended Three month ended December 31, December 31, 2004 2003 2004 2003 -------- ------- ------- --------

Revenues 57,918 35,021 17,513 11,923 Cost of revenues 6,914 4,439 2,350 1,563 -------- ------- ------- --------

Gross profit 51,004 30,582 15,163 10,360 -------- ------- ------- --------

Operating expenses Research and development, net 3,078 1,701 1,119 553 Selling and marketing 19,625 13,900 5,568 3,974 General and administrative 2,725 878 1,234 344 Settlement and related legal costs - 6,225 - 4,620 -------- ------- ------- --------

Total operating expenses 25,428 22,704 7,921 9,491 -------- ------- ------- --------

Operating income 25,576 7,878 7,242 869 Financial income, net 2,384 881 1,230 511 -------- ------- ------- --------

Income before taxes on income 27,960 8,759 8,472 1,380 Taxes on income 620 170 280 170 -------- ------- ------- --------

Net income 27,340 8,589 8,192 1,210 ======== ======= ======= ========

Basic net earnings per share 1.45 0.51 0.37 0.07 Diluted net earnings per share 1.14 0.42 0.30 0.06 Weighted average number of shares used in per share calculations (in thousands): Basic 18,917 16,814 22,001 17,027 Diluted 24,083 20,512 27,207 20,369

SYNERON MEDICAL LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands

December 31, December 31, 2004 2003 ------------- ------------

CURRENT ASSETS Cash and cash equivalents 12,468 6,153 Short-term deposits 57,893 - Marketable securities 23,071 11,410 Trade Receivable 8,628 4,845 Other accounts receivables and prepaid expenses 1,532 957 Inventories 3,134 1,487 ------------- ------------

Total current assets 106,726 24,852 ------------- ------------

LONG-TERM ASSETS Severance pay fund 196 120 Long-term bank deposit and others 28 1,035 Long-term trade receivables 754 488 Property and equipment, net 842 504 ------------- ------------

Total long-term assets 1,820 2,147 ------------- ------------

OTHER ASSET 1,000 - ------------- ------------

Total assets 109,546 26,999 ============= ============

CURRENT LIABILITIES Trade payables 1,520 2,208 Other current liabilities 10,135 8,131 ------------- ------------

Total current liabilities 11,655 10,339 ------------- ------------

LONG-TERM LIABILITIES Deferred revenues 3,276 2,184 Litigation settlement fee - 900 Accrued severance pay 214 135 ------------- ------------

Total long-term liabilities 3,490 3,219 ------------- ------------

Shareholders' equity 94,401 13,441 ------------- ------------

Total liabilities and shareholders' equity 109,546 26,999 ============= ============

SYNERON MEDICAL LTD. CONSOLIDATED STATEMENT OF CASH FLOWS U.S. dollars in thousands

Year ended Three month ended December 31, December 31, 2004 2003 2004 2003 -------- -------- ------- -------- Net income 27,340 8,589 8,192 1,210 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 143 84 53 42 Accrued severance pay, net 3 5 (6) - Increase in short-term and long-term trade receivables (4,049) (2,233) (93) (1,198) Increase in other accounts receivables and prepaid expenses (575) (693) (518) (262) Increase in inventories (1,647) (1,211) (615) (823) Increase (decrease) in trade payables (688) 1,363 (567) 602 Increase (decrease) in other current liabilities 389 4,552 (249) 3,134 Increase (decrease) in long-term litigation settlement fee (900) 900 - 900 Gain on available for sale securities (396) (341) (388) (337) Stock-based compensation 148 295 39 225 Increase in deferred revenues 2,843 3,090 1,763 1,895 Loss on sales of property and equipment 3 5 1 1 -------- --------

Net cash provided by operating activities 22,614 14,405 7,612 5,389 -------- -------- ------- --------

CASH FLOW FROM INVESTMENT ACTIVITIES - - Investment in short-term Deposits (56,873) - (980) 122 Purchase of available-for-sale securities (17,759) (11,258) (3,297) (11,258) Proceeds from sale of available-for-sale securities 6,116 487 4,189 9,639 Payment for acquisition of long-term bank deposit and others (13) (1,031) (3) (1,031) Purchase of property and equipment (484) (258) (202) (258) Purchase of other assets (1,000) - (1,000) - Proceeds from sale of property and equipment - 34 - 34 -------- -------- ------- --------

Net cash used in investing activities (70,013) (12,026) (1,293) (2,752) -------- -------- ------- --------

CASH FLOWS FROM FINANCING ACTIVITIES - - Short-term bank credit, net - (273) - - Proceeds from issuance of Ordinary and Preferred shares, net 53,851 - - - Exercise of options 98 147 98 - Repurchase of Preferred A shares from shareholders (235) (226) - (226) -------- -------- ------- --------

Net cash provided by (used in) financing activities 53,714 (352) 98 (226) -------- -------- ------- --------

Increase in cash and cash equivalents 6,315 2,027 6,417 2,411 Cash and cash equivalents at the beginning of the period 6,153 4,126 6,051 3,742 -------- -------- ------- --------

Cash and cash equivalents at the end of the period 12,468 6,153 12,468 6,153 ======== ======== ======= ========

--30--AR/se*

CONTACT: Syneron Medical Ltd. Moshe Mizrahy, CEO, +972 4 909-6349 moshem@syneron-med.com or David Schlachet, CFO, +972 4 909-6376 davids@syneron-med.com

KEYWORD: ISRAEL INTERNATIONAL AFRICA/MIDDLE EAST INDUSTRY KEYWORD: PHARMACEUTICAL MEDICAL DEVICES MEDICAL BIOTECHNOLOGY EARNINGS CONFERENCE CALLS SOURCE: Syneron Medical Ltd.

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