IntraLase Reports Profitable 2005 Third Quarter Diluted Earnings of $0.08 Per Share; Sale of 34 Lasers Boosts Worldwide Installed Base to 327

Business Wire, Oct 25, 2005

IRVINE, Calif. -- IntraLase Corp. (Nasdaq:ILSE) today reported continued revenues, earnings and installed base expansion for the third quarter and nine months ended September 30, 2005.

Robert J. Palmisano, President and Chief Executive Officer of IntraLase, said: "In addition to the expanding presence and growing market share of our IntraLase(R) FS laser around the world, clinical studies continue to validate the superiority of our blade-free approach to creating the corneal flap for LASIK surgery resulting in superior safety and better vision for patients. At the American Academy of Ophthalmology (AAO) meeting held October 13 - 18, 2005, approximately 25% of the refractive sub-specialty sessions included IntraLase, representative of our steadily expanding installed base and continued market share gains. This ongoing market acceptance by refractive surgeons and patients is reflected in our financial results for the third quarter."

Third Quarter Highlights

--Laser unit sales and leases grew 26%, to 34 for the period compared with 27 a year ago.

--Per-procedure unit sales grew 65%, to approximately 83,000 for the period compared with approximately 50,000 a year ago.

--IntraLase's share of the U.S. corneal flap market grew to approximately 19% to 20% compared to an estimated 18% at the end of the 2005 second quarter and 17% in the first quarter of 2005.

--IntraLase shipped and recognized revenue for 45 FS30 kHz upgrades, dramatically exceeding our previous goal of 40 by year end.

--China and Poland became the latest international markets to be served by the company. IntraLase lasers are now available in 24 countries.

--IntraLase received FDA 501K clearance for use of the IntraLase FS30 laser in creating the corneal resections performed in lamellar keratoplasty and penetrating keratoplasty procedures, allowing IntraLase to develop further therapeutic applications.

Q3 2005 Revenues of $22.9 Million

Revenues in the third quarter of 2005 were $22.9 million despite the third quarter typically being a seasonally weaker period. Revenues increased 48% to $22.9 million compared with $15.5 million for the 2004 third quarter. IntraLase sold or leased 34 lasers versus 27 lasers in the comparable period last year. Laser revenues for the period rose to $11.1 million compared with $8.6 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 70%, reaching $9.7 million compared with $5.7 million for the 2004 period. Maintenance revenues increased 74% to $2.1 million compared with $1.2 million in the third quarter last year.

Q3 2005 Profitability Trend Continues

Reflecting the increasing volume of procedures as well as lower costs for both the laser and the disposable patient interface, gross margin expanded to 54.0% from 45.1% in the same period in 2004. Per procedure fees rose to 43% of revenues compared with 37% in the third quarter of 2004. Operating expenses totaled $10.7 million versus $10.1 million in the year-ago quarter. Operating income was $1.7 million versus an operating loss of $3.1 million in the comparable 2004 period.

Net income in the third quarter was $2.4 million, or $0.08 per diluted share, compared with a net loss of $3.1 million, or $1.37 per diluted share, in the third quarter of 2004. Per-share calculations for the two periods reflect weighted average shares outstanding on a diluted basis of approximately 31.2 million in the 2005 third quarter and 2.3 million in the comparable 2004 period.

The third quarter of 2005 included a $119,964 non-cash charge relating to stock-based compensation. The same charge totaled $880,360 million in the 2004 third quarter. Excluding stock-based compensation and the effect of taxes, IntraLase's net income would have been $2.5 million during the third quarter of 2005 as compared with a net loss of approximately $2.3 million in the third quarter of 2004. While IntraLase does not currently expense employee stock options, stock-based compensation primarily 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. The consultant option expense can vary significantly from quarter to quarter based on the quarter ending stock price.

Nine Month Results

For the first nine months of 2005, revenues grew 64% to $67.1 million from $40.8 million during the prior-year period. Laser revenues were up 50% to $32.5 million compared with $21.7 million last year, while sales of procedure fees increased 80% to $28.9 million versus $16.1 million in the comparable 2004 period. Maintenance revenues increased 86% to $5.7 million compared with $3.0 million in the first nine months of 2004.

Gross margin expanded to 53.0% from 42.0% in the comparable nine-month period in 2004. The increase in gross profitability was primarily driven by an increase in per procedure fees of 80% as well as lower costs for both the laser and the disposable patient interface. Per procedure fees as a percentage of revenue increased during the period to 43% compared to 39% in the first nine months of 2004. Net income was $5.7 million, or $0.18 per diluted share, compared with a net loss of $7.1 million, or $3.15 per diluted share, for the first nine months of 2004. The 2005 period included a $1.2 million non-cash charge relating to stock-based compensation; this charge was $2.4 million in the first nine months of 2004. Per-share calculations for the two periods reflect weighted average shares outstanding on a diluted basis of approximately 31.2 million for the first nine months of 2005 and 2.3 million in the comparable 2004 period.