IntraLase Records Profitable 2005 Second Quarter on Strong Laser Placements, 76% Increase in Per-Procedure Unit Sales; Revenues Rise 45% to $23 Million; Sale of 39 Lasers Boosts Worldwide Installed Base to 293

Business Wire, July 28, 2005

IRVINE, Calif. -- IntraLase Corp. (Nasdaq:ILSE) today reported strong gains in revenue, its installed base, and per-procedure unit sales for the second quarter and six months ended June 30, 2005.

Robert J. Palmisano, President and Chief Executive Officer of IntraLase, said: "Continued rapid adoption of our IntraLase FS(R) laser worldwide generated strong demand for lasers and procedures, which in turn drove our financial performance. We are very pleased with our results, which have us on track to achieve our goal of operating profitably for every quarter in 2005 while expanding our global presence and increasing our market share."

Worldwide Market Penetration Continues in Second Quarter

Revenues increased 45% to $23.0 million compared with $15.8 million for the 2004 second quarter. IntraLase sold or leased 39 lasers versus 30 lasers in the comparable period last year, with the mix between domestic and international placements nearly equal in the 2005 quarter. Laser revenues for the period rose to $11.0 million compared with $9.2 million in the year-ago quarter. Reflecting the increasing utilization of the company's technology, revenues from per-procedure fees, inclusive of a disposable patient interface, grew 80%, reaching $10.1 million compared with $5.6 million for the 2004 period. Maintenance revenues increased to $1.9 million compared with $1.0 million in the second quarter last year.

IntraLase highlighted these additional second-quarter developments:

--Per-procedure unit sales saw 76% growth, exceeding 85,000 for the period compared with 48,000 a year ago.

--IntraLase's share of the U.S. corneal flap market grew to approximately 18% compared to an estimated 17% at the end of the 2005 first quarter and 16% at year-end 2004.

--In the United States, over 90% of IntraLase's customers installed over 30 days have converted to the IntraLase software upgrade to prevent disposable re-use and protect the company's per procedure revenue model.

--New customers worldwide are performing on average over 85% of their LASIK procedures with the IntraLase laser within 30 days of installation.

--Denmark and the Netherlands became the latest international markets to be served by the company. IntraLase lasers are now available in 22 countries.

Profitable Second Quarter

Gross margin expanded to 52.4% from 39.8% in the same period in 2004 due to per procedure fees rising to 44% of revenues compared with 35% in the second quarter of 2004, an increase of 26%, and lower costs for both the laser and the disposable patient interface. Operating expenses increased to $11.4 million from $8.2 million. IntraLase generated operating income of $686,000 versus an operating loss of almost $1.9 million in the comparable 2004 period.

IntraLase recorded net income of $1.3 million, or $0.04 per share on a diluted basis, for the 2005 period compared with a net loss of $1.9 million, or $0.83 per share on a diluted basis, for the 2004 quarter. Per-share calculations for the two periods reflect weighted average shares outstanding on a diluted basis of approximately 31.0 million in the 2005 second quarter and 2.2 million in the comparable 2004 period.

The 2005 period included a $1.1 million non-cash charge relating to stock-based compensation; this charge was $1.4 million in the 2004 quarter. Excluding stock-based compensation and the effect of taxes, IntraLase's net income would have been $2.5 million during the second quarter of 2005 as compared with a net loss of approximately $440,000 in the second quarter of 2004. While IntraLase does not currently expense employee stock options, stock-based compensation arises from options issued in the months before initial public offering (IPO) as a private company at prices less than the expected IPO price and consultant options, which can vary significantly from quarter to quarter based on the quarter ending stock price.

Six-Month Results

For the first six months of 2005, revenues grew 75% to $44.2 million from $25.3 million during the prior-year period. Laser revenues were up 63% to $21.5 million compared with $13.1 million, while sales of procedure fees reached $19.1 million versus $10.3 million in the comparable 2004 period. Maintenance revenues doubled, reaching $3.6 million compared with $1.8 million in the first six months of 2004.

Gross margin expanded to 52.5% from 40.1% in the comparable six-month period in 2004 due to per procedure fees increasing to 43% of revenues in the first half of 2005 versus 41% in the first six months of 2004, coupled with lower costs for both the laser and the disposable patient interface. Net income was $3.3 million, or $0.11 per share on a diluted basis, for the 2005 period compared with a net loss of $4.0 million, or $1.78 per share on a diluted basis, for the first six months of 2004. The 2005 period included a $1.1 million non-cash charge relating to stock-based compensation; this charge was $1.5 million in the first half of 2004. Per-share calculations for the two periods reflect weighted average shares outstanding on a diluted basis of approximately 31.1 million for the first six months of 2005 and 2.2 million in the comparable 2004 period.