IRVINE, Calif., Nov. 13, 2018 /PRNewswire/ -- BIOLASE, Inc. (NASDAQ: BIOL), the global leader in dental lasers, today reported a net revenue of $10.9 million for the third quarter which ended September 30, 2018. Excluding revenue from the Company's non-core imaging business, net revenue in the third quarter of 2018 increased 9% compared to the third quarter of 2017.

Recent Operating Highlights

• U.S. laser revenue for the third quarter increased 22% year over year
• Consumables and other revenue for the third quarter increased 9% year over year
• Southern California Model Market laser revenue for the third quarter increased 127% year over year
• Launched second Model Market initiative in Dallas/Ft. Worth
• Enhanced management leadership with addition of Todd Norbe as President and CEO and expanded Board expertise with the addition of Elaine Wagner, DDS, a renowned leader in the practice of pediatric dentistry

"Since joining BIOLASE in August, I have been impressed with the value of our technology and its ability to deliver on a new standard of care around dental procedures, which is being validated by a passionate and growing user community who have paved the way for further adoption through peer to peer referrals," said Todd Norbe, President and CEO. "For the third quarter of 2018, our U.S. laser revenue increased 22% year over year, while our Southern California Model Market laser revenue increased 127% year over year in Q3 and 175% over the last two quarters, reflecting early success as we test different go-to-market approaches. Our leadership team recently dedicated one full week to focus on lessons learned to establish the appropriate key performance indicators and process improvements required to deliver on our goal to be EBITDA positive in the fourth quarter of 2019. We believe the combination of our recently announced SWK term loan, improved operational efficiencies and anticipated improvements in sales and margins will provide sufficient liquidity for the Company to execute its long term business plan and achieve the goal of becoming EBITDA positive."

2018 Third Quarter Financial Results

Net revenue for the three months ended September 30, 2018 was $10.9 million, a slight increase compared to net revenue of $10.8 million for the three months ended September 30, 2017. U.S. laser revenue for the third quarter of 2018, which has become a higher priority for the Company, increased 22% compared to the third quarter of 2017 while the Company's non-core imaging business declined 65%. Consumables and other revenue for the third quarter of 2018, which consists of revenue from consumable products such as disposable tips, increased 9% compared to the third quarter of 2017.

Gross margin for the three months ended September 30, 2018 was 36% compared to 26% in the year-ago third quarter. The higher gross margin reflects new customer growth and a favorable change in product mix with an increase in lasers sales, which have a higher margin than our other product offerings. Total operating expenses for the third quarter of 2018 were $8.5 million compared to $7.6 million in the year-ago third quarter, mainly due to increased general and administrative expenses, and sales and marketing expenses. Operating loss for the third quarter of 2018 was $4.5 million compared to an operating loss of $4.8 million in the year-ago third quarter. Net loss for the third quarter of 2018 was $4.7 million, or $0.23 per share, compared to a net loss of $4.6 million, or $0.30 per share for the third quarter of 2017.

Cash, cash equivalents and investments totaled $2.4 million as of September 30, 2018.  Subsequent to the end of the third quarter, the Company announced on November 13, 2018 that it entered into a $12.5 million senior secured term loan agreement with SWK Funding LLC. SWK Funding LLC is a subsidiary of SWK Holdings Corporation, a Dallas, Texas based healthcare focused investment firm. The Company used a portion of the proceeds to retire its Western Alliance Bank debt and plans to use the remaining proceeds to provide additional working capital to fund its growth initiatives, such as broadening its customer base and increasing the utilization of its products to drive recurring higher margin consumables revenue.

First Nine Months 2018 Financial Results

Net revenue for the nine months ended September 30, 2018 was $33.1 million compared to net revenue of $34.3 million for the nine months ended September 30, 2017. Consumables and other revenue, which consists of revenue from consumable products such as disposable tips, increased 14% compared to the year-ago nine month period.

Gross margin for both the nine months ended September 30, 2018 and September 30, 2017 was 34%. Total operating expenses for the nine months ended September 30, 2018 were $25.7 million compared to $24.8 million in the year-ago period. Operating loss for the nine months ended September 30, 2018 was $14.4 million compared to an operating loss of $13.3 million for the nine months ended September 30, 2017. Net loss was $14.6 million, or $0.71 per share, for the nine months ended September 30, 2018 compared to a net loss of $13.0 million, or $0.92 per share, for the nine months ended September 30, 2017. The number of shares outstanding increased to 20.5 million as of September 30, 2018 from 14.1 million a year ago.

Use of Non-GAAP Measures

The "Reconciliation of GAAP Net Loss to Non-GAAP Net Loss" table at the end of this news release provides the details of the Company's non-GAAP disclosures and the reconciliation of GAAP net loss and net loss per share to the Company's non-GAAP net loss and net loss per share.

The non-GAAP net loss for the third quarter of 2018 was $3.8 million, or a loss of $0.19 per share, compared with a non-GAAP net loss of $3.8 million, or a loss of $0.25 per share, during the third quarter of 2017. The non-GAAP net loss for the first nine months of 2018 totaled $11.9 million, or a loss of $0.59 per share, compared with a non-GAAP net loss of $10.4 million, or a loss of $0.74 per share, during the first nine months of 2017.

Conference Call Information

BIOLASE will host a conference call today at 10:30 a.m. Eastern Time to discuss its operating results for the third quarter ended September 30, 2018, and to answer questions. To listen to the conference call live via telephone, dial 877-407-4019 from the U.S. or, for international callers, dial 201-689-8337, approximately 10 minutes before the start time. For all callers, refer to the Conference ID 13683990. To listen to the conference call live via the Internet, visit the Investors section of the BIOLASE website at www.biolase.com.

About BIOLASE

BIOLASE, Inc. is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine and also markets, sells, and distributes dental imaging equipment, including three-dimensional CAD/CAM intra-oral scanners and digital dentistry software. BIOLASE's products advance the practice of dentistry and medicine for patients and healthcare professionals. BIOLASE's proprietary laser products incorporate approximately 327 patented and 69 patent-pending technologies designed to provide biologically clinically superior performance with less pain and faster recovery times.  BIOLASE's innovative products provide cutting-edge technology at competitive prices to deliver the best results for dentists and patients.  BIOLASE's principal products are revolutionary dental laser systems that perform a broad range of dental procedures, including cosmetic and complex surgical applications, and a full line of dental imaging equipment. BIOLASE has sold over 38,100 laser systems to date in over 90 countries around the world. Laser products under development address BIOLASE's core dental market and other adjacent medical and consumer markets.

For updates and information on Waterlase iPlus®, Waterlase Express™, and laser dentistry, find BIOLASE online at www.biolase.com, Facebook at www.facebook.com/biolase, Twitter at www.twitter.com/biolaseinc and LinkedIn at www.linkedin.com/company/biolase.

BIOLASE®, Waterlase® and Waterlase iPlus® are registered trademarks of BIOLASE, Inc.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements, as that term is defined in the Private Litigation Reform Act of 1995, that involve significant risks and uncertainties, including statements regarding the use of the proceeds of the loan from SWK Funding LLC. Forward-looking statements can be identified through the use of words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "should," and variations of these words or similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect BIOLASE's current expectations and speak only as of the date of this release. Actual results may differ materially from BIOLASE's current expectations depending upon a number of factors.  These factors include, among others, adverse changes in general economic and market conditions, competitive factors including but not limited to pricing pressures and new product introductions, uncertainty of customer acceptance of new product offerings and market changes, risks associated with managing the growth of the business, and those other risks and uncertainties that are described, from time-to-time, in the "Risk Factors" section of BIOLASE's annual and quarterly reports filed with the Securities and Exchange Commission. Except as required by law, BIOLASE does not undertake any responsibility to revise or update any forward-looking statements.

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States ("GAAP"), this press release includes certain historical non-GAAP financial information.  Management believes that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results and that, in some respects, these non-GAAP financial measures are more indicative of the Company's ongoing core operating performance than their GAAP equivalents.

Non-GAAP net loss is defined as net loss before interest, taxes, depreciation and amortization, and stock-based compensation.  Management uses non-GAAP net loss in its evaluation of the Company's core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.

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SOURCE BIOLASE, Inc.