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In a release dated August 6, the company stated:
- Net sales were $25.9 million in the second quarter of 2009, down 6.8 percent from $27.8 million in the second quarter a year ago.
- Gross margin was 79.7 percent in the second quarter of 2009, compared with 81.8 percent in the second quarter of 2008. The decrease in gross margin percentage was primarily due to increased promotional costs incurred to drive business into new and existing physician practices.
- Net income in the second quarter of 2009 totaled $2.8 million, or $0.13 per diluted share, compared with $4.5 million, or $0.20 per diluted share, for the second quarter of 2008.
- Non-GAAP net income for the second quarter was $3.2 million, or $0.15 per diluted share, compared with non-GAAP net income of $1.8 million, or $0.08 per diluted share, for the first quarter of 2009. In April 2009, the company exited the pharmacy channel and discontinued selling SoluCLENZ Rx Gel. As a result, during the second quarter the company took a pre-tax charge of $353,000 related to the termination of certain contracts. Additionally, for the 13 days of April, prior to the discontinuation, the company generated SoluCLENZ revenue of $131,000 and operating expenses of $315,000, resulting in an operating loss of $173,000. Separately, the company recorded severance costs of $130,000 during the second quarter.
Steve Carlson, Obagi Medical Products' President and Chief Executive Officer, said, "Our continued investments to support our U.S. and international physician partnerships during these challenging economic times increased global sales 14 percent on a sequential basis. This growth in revenue improved our non-GAAP earnings per share from $0.08 to $0.15 per share sequentially from the first quarter. While we remain cautious in our expectations in the near term, we believe that the robust account growth of 18 percent over the first quarter supports our longer-term prospects for a return to more historical revenue growth rates and profit margins.
"We are confident in our current and growing leadership position in the topical aesthetic skin care market and in our ability to continue to expand our business. The results of newly published studies released last week, further demonstrates the superiority of our products and their compelling value propositions to physicians and their patients."
- As of June 30, the company was debt free with cash and cash equivalents, including short term investments, totaling $26.4 million, up from $19.9 million at December 31, 2008. Additionally, the company generated $4.7 million in cash flow from operations during the second quarter of 2009.
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