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

Business Wire, August 4, 2008

As of June 30, 2008, the Company had cash and cash equivalents of $7.4 million, including restricted cash of $0.1 million. This compares with cash and cash equivalents of $10.0 million as of December 31, 2007, including restricted cash of $0.1 million.

A reconciliation of non-GAAP financial measures to GAAP financial measures, and a presentation of the most directly comparable GAAP financial measures is included below.

Non-GAAP Measures

To supplement PhotoMedex's consolidated financial statements presented in accordance with GAAP, PhotoMedex provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted net loss and non-GAAP adjusted loss per share.

PhotoMedex'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 PhotoMedex's current financial performance and to provide further information for comparative purposes due to the adoption of accounting standard FAS 123R.

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. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:

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Sale of Surgical Services Segment

On June 13, 2008, the Company decided to sell its Surgical Services business and classify this segment as discontinued operations. Surgical Services is a fee-based procedures business using mobile surgical laser equipment operated by Company technicians at hospitals and surgery centers in the United States. On August 1, 2008, the Company entered into a definitive agreement to sell the assets held for sale including accounts receivable, inventory and equipment for $3,500,000, subject to working capital and other adjustments at closing. Closing is anticipated on August 8, 2008, subject to customary closing conditions. The accompanying consolidated financial statements reflect the operating results and balance sheet items of the discontinued operations separately from continuing operations. Prior-year financial statements for 2007 have been restated in conformity with generally accepted accounting principles to present the operations of Surgical Services as a discontinued operation.

"The proceeds from the sale of the Surgical Services business, once completed will give us additional capital to seek faster-growing, higher-margin dermatology opportunities. We appreciate the loyal service and dedication of the 50 employees who built a reputation in this area that was unsurpassed. Market conditions, however, eroded margins and masked the performance of our other higher-margin, faster-growing businesses. We believed that economies of scale to make this business more profitable could not be achieved with the current level of resources dedicated to this effort. Hence, we have agreed to sell the business unit to a company with a much larger presence in that business," said Mr. O'Donnell.