EXHIBIT 99.1
 
 
 
STRATA Skin Sciences Reports Fourth Quarter and Full Year 2016 Financial Results
Company is cash flow positive for the fourth quarter
Conference call and webcast, today at 4:30 pm Eastern Time

Horsham, PA, March 9, 2017
— (NASDAQ: SSKN) STRATA Skin Sciences, Inc. ("STRATA") a medical technology company dedicated to developing and commercializing innovative products for the treatment and diagnosis of serious dermatological disorders, today reported financial results for the quarter and year ended December 31, 2016.

Fourth Quarter and Recent Corporate Highlights
·
Fourth quarter revenues were $8.6 million
·
Recurring XTRAC revenues were $6.7 million, down 10.0% year-over-year and up 8.5% sequentially
·
Installed base of XTRAC systems in the U.S. expanded to 775 systems placed, up 7.9% from 718 at the end of the fourth quarter 2015
·
Company generated positive operating cash flow for the fourth quarter

"We are in the process of implementing a strategy that we believe will enhance our offering to the dermatology community and accelerate growth in our business," stated Frank McCaney, President and Chief Executive Officer of STRATA. "The initiatives we rolled out in recent months, together with work conducted under my predecessor, had a positive impact on our Q4 results. We continue to believe that medical office practices are undergoing significant changes and we are adjusting our business with the goal of better serving the needs of our customers and the marketplace. Our response to those changes underlies our longer term thinking about how best to grow our enterprise."

"We have prioritized the clinical development work on our Optimal Therapeutic Dose for XTRAC and are expanding outreach for building awareness about the use of XTRAC for vitiligo, atopic dermatitis (which includes eczema, particularly pediatric eczema) and scalp psoriasis. We believe that there is the potential for significant revenue growth through these campaigns. We are also active in business development with the objective of bringing other products for our call points into our available portfolio. We believe that by providing a set of unique and advantaged products we can help our customers to become more successful, thereby establishing STRATA as the Preferred Partner to the dermatology community."

- 1 -



Financial Results for the Fourth Quarter 2016
Revenues for the fourth quarter of 2016 were $8.6 million compared with revenues for the fourth quarter of 2015 of $9.5 million, a decrease of 8.9%.

Net loss for the fourth quarter of 2016 was $0.9 million or ($0.09) per diluted share, which included other income of $0.1 million for the change in fair value of warrant liability, $1.3 million in interest expense, $1.5 million in depreciation and amortization expenses and $0.1 million for income tax expense. This compares with a net loss for the fourth quarter of 2015 of $0.6 million or ($0.21) per diluted share, which included other income of $2.5 million for the change in fair value of warrant liability, $1.5 million in interest expense, $1.7 million in depreciation and amortization expenses and $0.1 million for income tax expense.
 
Financial Results for the Full Year 2016
Revenues for the full year 2016 were $31.8 million compared with revenues of $18.5 million in 2015. Reported revenues are not directly comparable to the prior year period since the Company acquired certain assets of PhotoMedex as of June 22, 2015.

Net loss for the year 2016 was $3.3 million or ($0.75) per diluted share, which included other income of $5.4 million for the change in fair value of warrant liability, $4.9 million in interest expense, $6.4 million in depreciation and amortization expenses and $0.3 million for income tax expense. This compares with a net loss in 2015 of $27.9 million or ($3.27) per diluted share, which included a deemed dividend of $3.0 million, other income of $1.8 million for the change in fair value of warrant liability, $4.8 million in inventory obsolescence charges; $10.2 million in interest expense, $0.5 million in acquisition costs and $4.0 million in depreciation and amortization expenses.

As of December 31, 2016 the Company had cash, cash equivalents and short-term investments of $3.9 million, compared with $3.3 million as of December 31, 2015.

In order to provide information that is helpful to investors relating to the historical and current growth of the XTRAC recurring revenues, the Company is providing the following table, including information obtained from the predecessor company's disclosures of previous period results.

- 2 -


Q4 2016 Supplemental Proforma Financial Information
As of December 31, 2016, Q4 Earnings Report
(unaudited)
(in thousands)
 
 
 
2015
 
 
Qtr. 1
 
Qtr. 2
 
Qtr. 3
 
Qtr. 4
 
YTD
 
XTRAC Recurring Revenue
 
$
5,376
*
 
$
6,678
**
 
$
7,032
   
$
7,479
   
$
26,565
***
                                         
 
 
2016
 
 
Qtr. 1
 
Qtr. 2
 
Qtr. 3
 
Qtr. 4
 
YTD
 
XTRAC Recurring Revenue
 
$
5,528
   
$
6,093
   
$
6,205
   
$
6,732
   
$
24,558
 
 
*As reported by PhotoMedex, Inc.
**$104 reported by the Company; balance reported by PhotoMedex, Inc.
***$14,615 reported by the Company; balance reported by PhotoMedex, Inc.

Non-GAAP Measures
To supplement the Company's consolidated financial statements, prepared in accordance with GAAP, the Company provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted EBITDA.

The Company's reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and to provide further information for comparative purposes.

Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company's core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:
- 3 -



    
Three Months Ended
December 31,
   
Year Ended
December 31,
 
   
2016
   
2015
   
2016
   
2015
 
    
(in thousands)
(Unaudited)
   
(in thousands)
(Unaudited)
 
Net loss as reported
 
(887
)
 
(593
)
 
(3,335
)
 
(24,947
)
Adjustments:
                               
Depreciation and amortization expense *
   
1,522
     
1,703
     
6,366
     
4,051
 
Interest expense, net
   
623
     
535
     
2,227
     
1,329
 
Non-cash interest expense
   
706
     
927
     
2,673
     
8,871
 
Income taxes
   
64
     
119
     
255
     
119
 
                                 
EBITDA
   
2,028
     
2,691
     
8,186
     
(10,577
)
                                 
Stock-based compensation expense
   
(288
)
   
270
     
113
     
1,753
 
Change in fair value of warrants
   
(80
)
   
(2,493
)
   
(5,396
)
   
(1,814
)
Acquisition costs
   
-
     
-
     
-
     
456
 
Impairment of property and equipment
   
-
     
-
     
-
     
920
 
Inventory valuation reserves
   
-
     
-
     
-
     
4,818
 
                                 
Non-GAAP adjusted EBITDA
 
$
1,660
   
$
468
   
$
2,903
   
(4,444
)

* Includes depreciation on lasers placed-in-service of $1,052 and $1,185 for the three months ended December 31, 2016 and 2015, respectively, and $4,410 and $2,364 for the year ended December 31, 2016 and 2015, respectively.
STRATA previously announced the scheduling of a conference call with investors to review the results of the fourth quarter. Following is the pertinent information for accessing that call.

Conference Call Detail:
Date:
 
Thursday, March 9, 2017
Time:
 
4:30 pm Eastern Time
Toll Free:
 
800-327-5138
International:
 
719-325-2250
Passcode:
 
1973486
Webcast:
 
www.strataskinsciences.com

Replays available through March 23, 2017:
Toll Free:
 
844-512-2921
International:
 
412-317-6671
Passcode:
 
1973486
Webcast:
 
www.strataskinsciences.com

- 4 -




About STRATA Skin Sciences, Inc.
(www.strataskinsciences.com)
STRATA Skin Sciences is a medical technology company focused on the therapeutic and diagnostic dermatology market. Its products include the XTRAC® laser and VTRAC® excimer lamp systems utilized in the treatment of psoriasis, vitiligo and various other skin conditions.

Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company's plans, objectives, expectations and intentions and may contain words such as "will," "may," "seeks," and "expects," that suggest future events or trends. These statements, including the Company's ability to generate the anticipated revenue stream, the Company's ability to generate sufficient cash flow to fund the Company's ongoing operations beginning at any time in the future, the Company's ability to execute on on-going or new R&D or treatment protocol programs, the Company's ability expand its product offerings,  the public's reaction the Company's new advertisements and marketing campaign, and the Company's ability to build a leading franchise in medical dermatology, are based on the Company's current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company's expectations due too financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the Company and the medical device industry in general, as well as more specific risks and uncertainties set forth in the Company's SEC reports on Forms 10-Q and 10-K. Given such uncertainties, any or all of these forward-looking statements may prove to be incorrect or unreliable. The Company assumes no duty to update its forward-looking statements and urges investors to carefully review its SEC disclosures available at www.sec.gov and www.strataskinsciences.com.

Investor Contacts:
Christina L. Allgeier, Chief Financial Officer
 
Bob Yedid, Managing Director
STRATA Skin Sciences, Inc.
 
LifeSci Advisors, LLC
215-619-3267
 
646-597-6989
callgeier@strataskin.com
 
bob@LifeSciAdvisors.com

- 5 -

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

       
   
December 31, 2016
   
December 31, 2015
 
             
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
3,928
   
$
3,303
 
Restricted cash
   
-
     
15
 
Accounts receivable, net
   
3,390
     
4,068
 
Inventories, net
   
2,817
     
4,128
 
Other current assets
   
617
     
465
 
Property and equipment, net
   
10,180
     
13,851
 
Goodwill and other intangible assets
   
22,215
     
24,155
 
Other non-current assets, net
   
46
     
94
 
Total assets
 
$
43,193
   
$
50,079
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Note payable
 
$
339
   
$
299
 
Current portion of long-term debt
   
1,714
     
-
 
Accounts payable and accrued current liabilities
   
3,845
     
6,607
 
Current portion of deferred revenues
   
235
     
173
 
Senior secured convertible debentures, net
   
12,028
     
9,839
 
Long-term debt, net
   
9,752
     
9,851
 
Warrant liability
   
105
     
7,042
 
Other long-term liabilities
   
456
     
181
 
Stockholders' equity
   
14,719
     
16,087
 
Total liabilities and stockholders' equity
 
$
43,193
   
$
50,079
 
                 

- 6 -


STRATA SKIN SCIENCES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)

   
For the Three Months Ended
December 31,
   
For the Year Ended
December 31,
 
   
2016
   
2015
   
2016
   
2015
 
                         
Revenues
 
$
8,631
   
$
9,480
   
$
31,757
   
$
18,495
 
                                 
Cost of revenues
   
3,005
     
3,493
     
12,636
     
13,719
 
                                 
Gross profit
   
5,626
     
5,987
     
19,121
     
4,776
 
 
                               
Operating expenses:
                               
Engineering and product development
   
388
     
740
     
1,929
     
2,029
 
Selling and marketing
   
3,079
     
3,553
     
13,152
     
9,194
 
General and administrative
   
1,755
     
3,209
     
7,637
     
10,028
 
 
   
5,222
     
7,502
     
22,718
     
21,251
 
                                 
Operating loss before other income (expense), net
   
404
     
(1,515
)
   
(3,597
)
   
(16,475
)
 
                               
Other income (expense), net:
                               
Interest expense, net
   
(1,329
)
   
(1,462
)
   
(4,900
)
   
(10,200
)
Change in fair value of warrant liability
   
80
     
2,493
     
5,396
     
1,814
 
Other (expense) income, net
   
22
     
10
     
21
     
33
 
     
(1,227
)
   
1,041
     
517
     
(8,353
)
                                 
Net loss before income taxes
   
(823
)
   
(474
)
   
(3,080
)
   
(24,828
)
                                 
Income tax expense
   
(64
)
   
(119
)
   
(255
)
   
(119
)
                                 
Net loss
   
(887
)
   
(593
)
   
(3,335
)
   
(24,947
)
                                 
Deemed dividend related to warrant modification
   
-
     
-
     
-
     
(2,962
)
                                 
Net loss attributable to common stockholders
 
(887
)
 
(593
)
 
(3,335
)
 
(27,909
)
                                 
Net loss per share:
                               
Basic
 
(0.08
)
 
(0.06
)
 
(0.31
)
 
(3.27
)
Diluted
 
(0.09
)
 
(0.06
)
 
(0.75
)
 
(3.27
)
                                 
                                 
Shares used in computing net loss per share:
                               
Basic
   
10,768,533
     
10,147,066
     
10,595,068
     
8,536,699
 
Diluted
   
10,768,533
     
10,147,066
     
11,578,573
     
8,536,699
 
                                 

- 7 -

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)


   
For the Year Ended
December 31,
 
   
2016
   
2015
 
Cash Flows From Operating Activities:
           
Net loss
 
(3,335
)
 
(24,947
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization
   
6,366
     
4,051
 
Stock-based compensation
   
113
     
1,753
 
Amortization of debt discount
   
2,473
     
8,479
 
Amortization of deferred financing costs
   
200
     
391
 
Change in fair value of warrant liability
   
(5,396
)
   
(1,814
)
Impairment of long-lived assets
   
-
     
920
 
Inventory write-offs
   
-
     
4,818
 
Other
   
484
     
139
 
Changes in operating assets and liabilities:
               
Current assets
   
2,093
     
(833
)
Current liabilities
   
(2,676
)
   
473
 
Net cash provided by (used in) operating activities
   
322
     
(6,570
)
                 
Cash Flows From Investing Activities:
               
Lasers placed-in-service, net
   
(1,008
)
   
(1,689
)
Other
   
140
     
(50
)
Acquisition costs, net of cash received
   
-
     
(42,500
)
Net cash used in investing activities
   
(868
)
   
(44,239
)
                 
Cash Flows From Financing Activities:
               
Proceeds from convertible debentures
   
-
     
32,500
 
Proceeds from senior notes
   
-
     
10,000
 
Repayment of senior notes
   
-
     
(10,000
)
Proceeds from term debt
   
1,500
     
10,500
 
Other financing activities
   
(333
)
   
(330
)
Net cash provided by financing activities
   
1,167
     
42,670
 
                 
Effect of exchange rate changes on cash
   
4
     
8
 
                 
Net decrease in cash and cash equivalents
   
625
     
(8,131
)
Cash and cash equivalents, beginning of period
   
3,303
     
11,434
 
                 
Cash and cash equivalents, end of period
 
$
3,928
   
$
3,303
 

Supplemental information:
           
Cash paid for interest
 
$
2,054
   
$
1,188
 
                 
Supplemental information of non-cash investing and financing activities:
               
Modification of warrants recorded as a deemed dividend
 
$
-
   
$
2,962
 
Conversion of senior secured convertible debentures into common stock
 
$
265
   
$
4,815
 
Reclassification of property and equipment to inventory, net
 
$
-
   
$
107
 
Reclassification of warrant liability to (from) stockholders' equity
 
$
1,541
   
$
(5,399
)
Recognition of debt discount and beneficial conversion feature on long-term debt
 
$
-
   
$
27,300
 
Recognition of warrants issued with term note credit facility as debt discount
 
$
47
   
$
321
 
Prepaid insurance financed with notes payable
 
$
372
   
$
334
 
Recognition of warrants issued in connection with financings
 
$
-
   
$
2,958
 

 
 

- 8 -

The following information was filed by Strata Skin Sciences, Inc. (SSKN) on Thursday, March 9, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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