UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): May 11, 2017


STRATA SKIN SCIENCES, INC.
(Exact Name of Registrant Specified in Charter)
 
 
 
Delaware
000-51481
13-3986004
(State or Other
(Commission File
(I.R.S. Employer
Jurisdiction of
Number)
Identification No.)
Incorporation)
 
 
  
 
100 Lakeside Drive, Suite 100, Horsham, Pennsylvania
       19044
 
 
(Address of Principal Executive Offices)
(Zip Code)
 
 
 
Registrant's telephone number, including area code:   215-619-3200

 (Former Name or Former Address, 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02.          Results of Operations and Financial Condition.

On May 11, 2017, STRATA Skin Sciences, Inc. (the "Company") issued a press release announcing its results of operations for the first fiscal quarter ended March 31, 2017The full text of such press release is furnished as Exhibit 99.1 to this report.

The Company makes reference to non-GAAP financial information in the press release furnished herewith.  Specifically, these non-GAAP measures include non-GAAP adjusted net loss and non-GAAP adjusted loss per share.  There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.  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 the Company's 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 that exclude stock-based compensation expense and other non-cash or non-recurring expenses enhance the comparability of results against prior periods.  A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release.

The information set forth under this Item 2.02, including 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, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.


ITEM 9.01.          Financial Statements and Exhibits.

(d)          Exhibits.

The following press release is furnished as an exhibit to this Current Report on Form 8-K pursuant to Item 2.02 and shall not be deemed to be "filed":

99.1          Press Release dated May 11, 2017 issued by STRATA Skin Sciences, Inc.

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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.

 
STRATA SKIN SCIENCES, INC.
 
 
 
 
 
Date: May 11, 2017
By:
/s/ Christina Allgeier                         
 
 
 
Christina Allgeier
 
 
 
Chief Financial Officer
 



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EXHIBIT INDEX


Exhibit No.
Exhibit Description
      99.1
Press Release dated May 11, 2017 issued by STRATA Skin Sciences, Inc.



 

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EXHIBIT 99.1
 
 
STRATA Skin Sciences Reports First Quarter 2017 Financial Results
Licensing of Two New Products Demonstrates Execution on Corporate Strategy

Conference call and webcast, today at 4:30 pm Eastern Time

Horsham, PA, May 11, 2017 — (NASDAQ: SSKN) STRATA Skin Sciences, Inc. ("STRATA") a medical technology company in Dermatology and Plastic Surgery dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions, today reported financial results for the quarter ended March 31, 2017.

First Quarter and Recent Corporate Highlights
·
First quarter total revenues of $7.3 million, which included recurring XTRAC® revenue of $5.7 million, accounting for 78.8% of total revenues
·
Recurring XTRAC revenues were $5.7 million, up 3.7% year-over-year
·
Installed base of XTRAC systems in the U.S. expands to 791 systems placed, up 8.4% from 730 at the end of the first quarter 2016

"The first quarter saw continued progress on the commercial front as we continue to position STRATA for further growth. Both recurring revenues and XTRAC placements were up year over year. Business development is a key element of our corporate strategy and we were pleased to announce in March that STRATA is now the exclusive U.S. distributor of the differentiated best-in-class Ellipse line of lasers, with the Nordlys representing the latest in non-ablative fractionated laser technology," stated Frank McCaney, President and Chief Executive Officer of STRATA. "This agreement is consistent with our goal to become The Dermatological and Aesthetic Practice Partner, leveraging our existing infrastructure, including our current group of sales representatives, strong field service group, reimbursement capabilities and call center. We expect that the Nordlys laser will have an immediate positive impact on STRATA's financials and will contribute to overall sales and non-GAAP adjusted EBITDA for the balance of 2017."

"We have also added the STRATAPEN Product, which we have licensed from an OEM. This is a highly advantaged aesthetic dermatological product that is specifically developed for micropigmentation," added Mr. McCaney. "The STRATAPEN utilizes the patent-pending Biolock™ cartridge, which greatly reduces the risk of contamination, and also the patent-pending removable and autoclavable nosecone, further improving safety. Both the Nordlys laser and the STRATAPEN are excellent complements to our XTRAC system, where we continue to fine tune our business with the goal of better serving the needs of our customers and the marketplace."

Reported Financial Results
Revenues for the first quarter of 2017 were $7.3 million compared with revenues for the first quarter of 2016 of $7.6 million.

Net loss for the first quarter of 2016 was $2.2 million or ($1.03) per diluted share, which included other expense 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 first quarter of 2016 of


$1.4 million or ($1.30) per diluted share, which included other income of $2.0 million for the change in fair value of warrant liability, $1.2 million in interest expense and $1.7 million in depreciation and amortization expenses.

As of March 31, 2017, the Company had cash and cash equivalents of $3.8 million, compared with $3.9 million as of December 31, 2016.

Non-GAAP Measures
To supplement the Company's consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America ("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:


    
Three Months Ended
March 31,
 
   
2017
   
2016
 
    
(in thousands)
(Unaudited)
 
Net loss as reported
 
(2,235
)
 
(1,437
)
Adjustments:
               
Depreciation and amortization expense
   
1,542
     
1,684
 
Interest expense, net
   
569
     
532
 
Non-cash interest expense
   
777
     
686
 
Income taxes
   
70
     
66
 
                 
Non-GAAP EBITDA
   
723
     
1,531
 
                 
Stock-based compensation expense
   
52
     
170
 
Change in fair value of warrants
   
132
     
(1,985
)
                 
Non-GAAP adjusted EBITDA
 
$
907
   
( 284
)

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STRATA previously announced the scheduling of a conference call with investors to review the results of the first quarter. Following is the pertinent information for accessing that call.

Conference Call Detail:
Date:
 
Thursday, May 11
Time:
 
4:30 pm Eastern Time
Toll Free:
 
888.857.6930
International:
 
719.325.2432
Passcode:
 
3263032
Webcast:
 
www.strataskinsciences.com

Replays available through May 25, 2017:
Toll Free:
 
844.512.2921
International:
 
412.317.6671
Passcode:
 
3263032
Webcast:
 
www.strataskinsciences.com

About STRATA Skin Sciences, Inc.
(www.strataskinsciences.com)
STRATA Skin Sciences is a medical technology company focused on the therapeutic and aesthetic 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; the STRATAPEN™ MicroSystem, marketed specifically for the intended use of micropigmentation; and Nordlys, a multi-technology aesthetic laser device.

Trademarks
Ellipse and Nordlys are trademarks of Ellipse S/A, Horsholm, Denmark

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 public's reaction the Company's new advertisements and marketing campaign, and the Company's ability to build a leading franchise in dermatology and aesthetics, 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 to 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

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

       
   
March 31, 2017
   
December 31, 2016
 
   
(unaudited)
       
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
3,763
   
$
3,928
 
Accounts receivable, net
   
3,288
     
3,390
 
Inventories
   
2,670
     
2,817
 
Other current assets
   
804
     
617
 
Property and equipment, net
   
9,975
     
10,180
 
Goodwill and intangible assets, net
   
22,661
     
22,215
 
Other non-current assets, net
   
46
     
46
 
Total assets
 
$
43,207
   
$
43,193
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Long-term debt and other notes payable
 
$
11,758
   
$
11,805
 
Accounts payable and accrued current liabilities
   
4,420
     
3,845
 
Current portion of deferred revenues
   
334
     
235
 
Senior secured convertible debentures, net
   
12,695
     
12,028
 
Warrant liability
   
237
     
105
 
Other long-term liabilities
   
1,171
     
456
 
Stockholders' equity
   
12,592
     
14,719
 
Total liabilities and stockholders' equity
 
$
43,207
   
$
43,193
 

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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 March 31,
 
   
2017
   
2016
 
             
Revenues
 
$
7,272
   
$
7,620
 
                 
Cost of revenues
   
2,733
     
3,422
 
                 
Gross profit
   
4,539
     
4,198
 
 
               
Operating expenses:
               
Engineering and product development
   
475
     
525
 
Selling and marketing
   
3,150
     
3,710
 
General and administrative
   
1,601
     
2,101
 
 
   
5,226
     
6,336
 
                 
Operating loss before other income (expense), net
   
(687
)
   
(2,138
)
 
               
Other income (expense), net:
               
Interest expense, net
   
(1,346
)
   
(1,218
)
Change in fair value of warrant liability
   
(132
)
   
1,985
 
     
(1,478
)
   
767
 
                 
Loss before income taxes
   
(2,165
)
   
( 1,371
)
                 
Income tax expense
   
(70
)
   
(66
)
                 
Net loss
 
(2,235
)
 
(1,437
)
                 
Net loss per share:
               
Basic
 
(1.03
)
 
(0.70
)
Diluted
 
(1.03
)
 
(1.30
)
                 
                 
Shares used in computing net loss per share:
               
Basic
   
2,176,731
     
2,067,931
 
Diluted
   
2,176,731
     
2,661,585
 

 

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


   
For the Three Months Ended
March 31,
 
   
2017
   
2016
 
Cash Flows From Operating Activities:
           
Net loss
 
(2,235
)
 
(1,437
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
               
Depreciation and amortization
   
1,543
     
1,684
 
Stock-based compensation
   
52
     
170
 
Amortization of debt discount
   
723
     
639
 
Amortization of deferred financing costs
   
54
     
48
 
Change in fair value of warrant liability
   
132
     
(1,985
)
Other
   
60
     
100
 
Changes in operating assets and liabilities:
               
Current assets
   
61
     
846
 
Current liabilities
   
428
     
(1,461
)
Net cash provided by (used in) operating activities
   
818
     
(1,396
)
                 
Cash Flows From Investing Activities:
               
Lasers placed-in-service, net
   
(683
)
   
(197
)
Other
   
(200
)
   
15
 
Net cash used in investing activities
   
(883
)
   
(182
)
                 
Cash Flows From Financing Activities:
               
Proceeds from term debt
   
-
     
1,500
 
Other financing activities
   
(100
)
   
(105
)
Net cash provided by (used in) financing activities
   
(100
)
   
1,395
 
                 
Net decrease in cash and cash equivalents
   
(165
)
   
(183
)
Cash and cash equivalents, beginning of period
   
3,928
     
3,303
 
                 
Cash and cash equivalents, end of period
 
$
3,763
   
$
3,120
 

Supplemental information:
           
Cash paid for interest
 
$
540
   
$
442
 
                 
Supplemental information of non-cash investing and financing activities:
               
Conversion of senior secured convertible debentures into common stock
 
$
56
   
$
165
 
Recognition of warrants issued as debt discount
 
$
-
   
$
47
 
Acquisition of distributor rights asset and license liability
 
$
900
   
$
-
 

 
 

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