PhotoMedex Reports 2008 Second Quarter Results; Announces Sale of Surgical Services Business

Business Wire, August 4, 2008

MONTGOMERYVILLE, Pa. -- PhotoMedex, Inc. (NASDAQ: PHMD), a leader in the development of proprietary excimer laser and fiber optic systems as well as other products for dermatological applications, today reported financial results for the three months ended June 30, 2008 and the sale of its Surgical Services business unit.

Financial highlights of the 2008 second quarter, after adjusting prior periods for the discontinued operations of the Surgical Services business unit, include:

* Consolidated revenues of $9.4 million, up 28% versus the prior year and up 13% sequentially

* XTRAC([R]) domestic revenues up 55% versus the prior year and up 63% sequentially

* XTRAC recognized procedures up 50% versus the prior year and up 45% sequentially

* XTRAC domestic equipment sales up 60% versus the prior year and up 101% sequentially

* Skin Care revenue up 11% versus the prior year and up 5% sequentially

* Surgical Products revenues up 33% versus the prior year and up 3% sequentially

"We are very pleased with the sales progress we are making with the XTRAC for the treatment of psoriasis, and believe that the recent improvement in the number of third-party payers has contributed to sales acceleration. We placed 73 XTRAC lasers during the quarter, sold 21 including 18 to existing customers, and removed 13 systems. New placements represent an increase of 152% from the prior year and a 35% increase from the prior quarter, and we expect the new customer placement rate to continue to increase throughout the balance of 2008," said Jeffrey O'Donnell, president and chief executive officer of PhotoMedex."

Reimbursement

* Massachusetts Blue Cross and Blue Shield issued coverage for XTRAC for the treatment of mild-to-moderate psoriasis.

FDA

* Received U.S. Food and Drug Administration 510k clearance to market the new, more powerful and faster XTRAC Velocity[TM] excimer laser system to treat psoriasis, vitiligo, atopic dermatitis and leukoderma. The XTRAC Velocity laser system delivers the highest UV power of any medical excimer laser on the market today.

Reported Financial Results

Revenues from continuing operations for the three months ended June 30, 2008 were $9.4 million, compared with revenues from continuing operations for the three months ended June 30, 2007 of $7.3 million, an increase of 28%. Revenues from continuing operations for the six months ended June 30, 2008 were $17.8 million, compared with revenues from continuing operations for the six months ended June 30, 2007 of $14.5 million, an increase of 22%.

The loss from continuing operations for the second quarter of 2008 was $1.1 million or ($0.02) per share, compared with a loss from continuing operations for the second quarter of 2007 of $2.0 million or ($0.03) per share. The 2008 second quarter loss from continuing operations included non-cash charges and interest expense (net) of $2.3 million including stock-based compensation expense of $0.3 million, and depreciation and amortization of $1.2 million. The 2007 second quarter loss from continuing operations included non-cash charges and interest expense (net) of $1.8 million including stock-based compensation expense of $0.4 million, and depreciation and amortization of $1.2 million.

For the three months ended June 30, 2008, income from discontinued operations was $77,069. For the three months ended June 30, 2007 income from discontinued operations was $126,919. For the three months ended June 30, 2008 the loss on the sale of discontinued operations was $545,844. There was no loss on the sale of discontinued operations recorded in 2007. The net loss for the three months ended June 30, 2008 was $1.6 million or ($0.03) per share, compared with a net loss for the three months ended June 30, 2007 of $1.8 million or ($0.03) per share.

The loss from continuing operations for the first half of 2008 was $3.8 million or ($0.06) per share, compared with a loss from continuing operations for the first half of 2007 of $3.8 million or ($0.06) per share. The 2008 first half loss from continuing operations included non-cash charges and interest expense (net) of $4.2 million including stock-based compensation expense of $0.7 million, and depreciation and amortization of $2.4 million. The 2007 first half loss from continuing operations included non-cash charges and interest expense (net) of $3.5 million including stock-based compensation expense of $0.8 million, and depreciation and amortization of $2.3 million.

For the six months ended June 30, 2008, income from discontinued operations was $245,870. For the six months ended June 30, 2007 income from discontinued operations was $93,031. For the six months ended June 30, 2008 the loss on the sale of discontinued operations was $545,844. There was no loss on the sale of discontinued operations recorded in 2007. The net loss for the six months ended June 30, 2008 was $4.2 million or ($0.07) per share, compared with a net loss for the six months ended June 30, 2007 of $3.7 million or ($0.06) per share.

PhotoMedex reported positive cash flow from operations of $0.2 million for the three months ended June 30, 2008 and $1.6 million and for the six months ended June 30, 2008.