Syneron Medical's (ELOS) CEO Amit Meridor on Q2 2014 Results - Earnings Call Transcript

| About: Syneron Medical (ELOS)

Start Time: 08:37

End Time: 09:20

Syneron Medical Ltd. (NASDAQ:ELOS)

Q2 2014 Earnings Conference Call

August 6, 2014 08:30 AM ET

Executives

Shimon Eckhouse - Chairman

Amit Meridor - CEO

Hugo Goldman - CFO

Zack Kubow - The Ruth Group

Analysts

Ravi Misra - Leerink Partners LLC

Anthony Vendetti - Maxim Group LLC

Zack Ajzenman - Griffin Securities, Inc.

Operator

Good day, ladies and gentlemen, and welcome to the Syneron Medical Ltd. Q2 2014 Results Conference Call. Today’s conference is being recorded. (Operator Instructions)

At this time, I’d like to turn the conference over to Zack Kubow. Please go ahead sir.

Zack Kubow

Thank you, operator. I’d like to welcome you to Syneron Medical’s second quarter 2014 conference call. Presentation slides accompanying this conference call are available through the Webcast that is available on Syneron’s Investor Relations Web site. We encourage listeners to log into the Webcast in order to view the slides.

As outlined, on Slide 2, statements on this call and in this presentation may be forward-looking within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, relating to the Company’s future events or future performance, including statements with respect to Syneron’s expectations regarding, but not limited to, the financial forecast for 2014, the launch of new products, timing of regulatory clearance of products, the expansion of the North American sales team, and dedicated sales force for various products, the growth rate of UltraShape by 2018, the global market share for our Body Shaping business within three years, the market potential for our various products, the maintenance of a leadership position in core and non-core markets, and prospects for the Iluminage Beauty joint venture and the CoolTouch acquisition,.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied in any forward-looking statements. These risks may include, but are not limited to the risk factors set forth under the heading Risk Factors in Syneron’s Annual Report on Form 20-F filed with the SEC.

These factors are updated from time-to-time through the filing of reports and registration statements with the Securities and Exchange Commission. These statements are only predictions and Syneron cannot guarantee that they will in fact occur. The Company does not assume any obligation to update the forward-looking statements discussed in today’s conference call.

Finally, this call and presentation will discuss non-GAAP financial measures. Syneron provides reconciliation information at the end of the second quarter 2014 results press release on the Investor Relations page at www.syneron.com.

Speaking on the call today are Syneron’s Chairman, Shimon Eckhouse; Syneron’s CEO, Amit Meridor and Syneron’s CFO, Hugo Goldman.

Now I’d like to turn the call over to Amit.

Amit Meridor

Thank you, Zack, and good morning everyone. Welcome to Syneron’s second quarter 2014 conference call. Beginning on Slide 3, the agenda for today’s call will be as follows: I will begin with a brief review of our financial results, recent highlights, and key business update. Shimon will provide some specific comments on the recently launched PicoWay system. Following our remarks, Hugo will provide a detailed financial review and then we will open the call for your questions.

Turning to Slide 4, we achieved solid results in the second quarter and made good progress with our strategic growth initiative. Total revenue on a pro-forma basis was up 6% year-over-year and 14% quarter-over-quarter.

In the second quarter of 2014, we generated $3.7 million in cash, while heavily investing in sales force build up and Body Shaping business group. This came after several quarters of negative cash flow.

In North America, revenue on a pro-forma basis grew 10% year-over-year and 20% quarter-over-quarter. This strong double-digit growth was driven by improved sales of Syneron product line. In May, we completed substantial expansion of our North America sales team. This enhanced our ability to address recovering non-core market.

In addition, we have 7 out of the 25 dedicated Body Shaping reps, will support in the controlled market introduction of UltraShape. This began in the second quarter and is showing very encouraging sign as we will present in this call. Last, we had 18 reps to focus on the CoolTouch family of products.

Overall, we now have 73 sales people in North America across our traditional reps focused on the Syneron and Candela product lines, our Body Shaping team and our CoolTouch team.

To expand the team is a key component of our growth strategy in North America. Another growth driver in North America will be the recently FDA clearance 5 millimeter spot size of the GentlePRO family of product for the treatment of toenail fungus. This is in addition to existing capabilities of the GentlePRO for hair removal and treatment of vascular and pigmented lesions. Toenail fungus is one of the most commonly diagnostic foot condition affecting 10%, 12% of the population.

International revenues in the second quarter on a pro-forma basis were up 4% year-over-year and 11% quarter-over-quarter. We had a good performance in the EMEA and Asia Pacific regions.

Within Europe, we’re beginning to see improved results to -- due to the economic recovery. We are also benefiting from our strong infrastructure of direct subsidiaries and establish this [ph] [division] partner.

In Asia, we experienced growth in China, partially offset by the weakness in Japan. We now have three direct offices in China supporting a team of 29 employees; including 14 sales reps. We are also encouraged that the Syneron product line is attracting interest from the Chinese retail spa chain market.

Last week we announced CE Mark clearance for the PicoWay device, which we believe will be an important growth driver of our business. PicoWay announces our position in the large market of laser for tattoo removal and for the treatment of pigmented lesions.

Shimon will provide an overview of the PicoWay technology. Overall, we’re pleased with our second quarter results and the positive trend we’re seeing in North America and international markets. We believe our investment in our North America sales force and in new products put us in an excellent position to achieve improved results.

I’ll now turn to our key business updates. We will begin with UltraShape on Slide 6. Since receiving the FDA clearance in April, we began shipping UltraShape system as of June to certain select KOLs in the U.S as part of our controlled market introduction.

As I mentioned, we have hired 7 Practice Development Partners or PDPs to support customers. We have received very positive feedback on the UltraShape system and believe there is a significant demand for the product. The controlled introduction has also increased our confidence in our U.S (indiscernible) business model and the ability of our PDPs to support this model.

Based on this positive initial indication, I’m very pleased to report that we’re accelerating the commercial launch of UltraShape into fourth quarter of 2014, instead of the first quarter of 2015. In order to support and expand the UltraShape customer base, we plan to bring our Body Shaping sales team to 20 sales reps on PDPs by the end of the year. We hope to have a team of 12 to 15 by the end of September. This team will be supported by high profile PR and marketing campaign on several upcoming customer workshop, focused on the UltraShape and Body Shaping.

On September 17, we will host an Investor Meeting, in New York focused on the UltraShape and to accelerate commercial launch. Please save the date in your calendars.

Slide 7 highlights a quote from a recent news segments on ABC News, in New York that aired yesterday demonstrating the significant real world result realized by patient with UltraShape system. The patient was treated by Dr. Dennis Gross and achieved a reduction of 3 inches and 6 pounds. We will now play a video clip for you of this news segment in the Webcast player.

We will move on. The Slide 8 provides another clear example of why there is a robust interest in UltraShape system. Its pre and post treatment images provide real world example of the excellent individual patient result achieved with UltraShape system in Canada by Dr. Arie Benchetrit.

On the left side, this patient saw a reduction of 4.7 centimeters in their upper abdomen and 5.4 centimeter in their lower abdomen in four weeks after treatment. They also lost 2.2 kilograms in weight. This is a relatively young patient and it is the unique feature of the UltraShape system to easily treat a large area of both upper and lower abdomen.

Similarly, on the right side, this patient achieved a 5 centimeter reduction and lost 2.2 kilograms at 4 weeks post treatment. Again, we see a large overall treatment area and excellent results.

On Slide 9, we have images of male patient that receives treatment of the plank or sides from Dr. Wendy Tink. The left hand set of images show a patient of that achieved a reduction of 14 centimeters and weight losses of 3.2 kilograms at 2 months post treatment. It is important to note that the clear change in geometry of the patient mid section, no measurement is needed to understand the effectiveness of this treatment.

The right hand set of images show a patient that achieved 10 centimeters of reduction and a weight losses of 3.2 kilogram. These results were achieved in just two weeks post treatment, which is much quicker than any competitive products on the market today.

Turning to Slide 10, we are very excited about our UltraShape potential in the large global market for non-invasive fat destruction and its unique capabilities of immediate and high selective fat destruction. The global non-invasive fat destruction segment reached $150 million at the end of 2013. This represents only a portion of the total $640 million body shaping and skin tightening market.

Importantly, North America represents 80% of the non-invasive fat destruction market. By 2017, this market segment is expected to expand to $330 million, growing at a CAGR of 30% per year.

Our overall goal for our body shaping business is to reach 20% to 30% of global market share within three years, through sales of capital equipment and disposables. We expect our mix will be approximately 50% capital equipment, and 50% disposables.

Now I’ll turn the call over to Shimon, to discuss another exciting new product, the PicoWay system. Shimon?

Shimon Eckhouse

Thank you, Amit, and good morning, everyone. I’m pleased to update you about PicoWay, our new tattoo removal system. I will begin with Slide 11. PicoWay is a dual wavelength picosecond laser indicated to treat tattoos of all types and colors along with pigmented lesions of any skin type.

This proprietary technology delivers laser energy to their skin using picosecond pulses. Importantly, the PicoWay system delivers the shortest pulse of any device on the market and has the highest peak power of any device on the market. This positions it as a potential leader in the growing market for a tattoo remover and the treatment of pigmented lesion.

We obtained CE Mark clearance of the system in July and plan to initiate a controlled market launch in Europe and Asia during the third quarter. Globally Candela has close to 1,400 dedicated tattoo in pigmented lesion lasers and more than 11,000 Candela platforms that include pigmented lesion indications. This provides us with the large opportunity of cross-selling, upgrades, and new customer outreach.

The initial clinical data on PicoWay system was presented at the International Master Course of Anti Aging and Skin or IMCAS Meeting last week end. Dr. Henry Chan, a Hong Kong based KOL in Dermatology and one of the most respected laser dermatologist in the world, presented results from a study he conducted using PicoWay to treat pigmented lesions. He found the system to be effective, safe and comfortable with high satisfaction rate among patients. These are excellent results and are important, given the high prevalence of pigmented lesions in Asian market.

In the U.S., we expect to receive FDA clearance by the end of the year. This will be a significant milestone given the large market opportunity for tattoo removal in the U.S. It is estimated that 20% of 45 million Americans with at least one tattoo will want to have it removed.

I’ll now turn the call back to Amit. Amit?

Amit Meridor

Thank you, Shimon. Turning now to Slide 12. We made impressive progress with elure in Asia during the second quarter. One, in July we announced China Food and Drug Administration clearance for the elure Advanced Skin Brightening Lotion. As we have described in the past, we believe elure’s unique safety and efficacy profile will be well received in China, which is a key market for Elure.

It’s estimated that China skin lightening retail revenue are approximately $1.9 billion. Two, we signed a distribution agreement in Korea (indiscernible) is a leading specialty pharma company in Korea with more than 60 sales people, giving strong physician coverage and complimentary products to the elure.

Three, we shipped our first commercial order to our Japanese distributor. Four, we continued strategic discussion with potential partners to bring elure to the retail market through (indiscernible).

Slide 13, outlines the key updates for CoolTouch and the Iluminage Beauty in the quarter. I will begin with CoolTouch. In the second quarter we were focused on the integration of the CoolTouch business and we will remain on track with our plans. We have hired 8 out of the 10 planned sales reps for the U.S market. This will add improved coverage and focus for the CoolTouch family products and associate consumable. Outside of the U.S., we have begun exploring opportunities to leverage our broad international infrastructure to sell CoolTouch product.

Turning to Iluminage Beauty. The joint venture is tracking to plan. The Iluminage Beauty business had a record revenue quarter. This includes the QVC launch of the Iluminage Touch. The Touch is the next generation of the me Home-use Hair Removal Systems. And a very successful launch sold out more than 11,000 units.

I’ll now turn the call over for Hugo, for his financial review. Hugo?

Hugo Goldman

Thank you, Amit, and good morning, everyone. As a reminder, I’ll be making comparisons to the pro forma results from the second quarter of 2013, excluding Syneron Beauty.

I’ll begin on Slide 15, with a quick overview of our revenue results for the second quarter of 2014. Second quarter 2014 total revenue was $64.6 million, up 6.1% year-over-year on a pro forma basis from the second quarter 2013. North America revenue was up 9.7% at $22 million; and international revenue was up 4.4% at $42.7 million.

The international results included a negative impact of approximately $300,000 due to changes in foreign currency exchange rates, mainly the decrease in the value of the Japanese yen and the Australian dollar against the U.S. dollar, compared to the second quarter of 2013.

Second quarter sales from North America corresponds to 34% of total revenue, with the balance of 66% coming from international markets.

Second quarter 2014 product revenue was $44.7 million, up 1.5% on a pro forma basis. In North America product revenue increased 5.9% in the second quarter. Recurring revenue, which includes service and consumables, was $19.9 million, up 18.1% on a pro forma basis.

Recurring revenue represented 30.8% of total revenue in the second quarter of 2014, up from 27.7% in the second quarter of 2013. This will be a key metric moving forward as our North American sales force (indiscernible) we launch UltraShape with our new business model. We made progress with our CoolTouch products and consumables and continue to focus on bringing innovative new products to the market with the recurring revenue components.

Turning to Slide 16, non-GAAP gross margin for the second quarter of 2014 was 54.2%, excluding stock-based compensation, amortization of acquired intangible assets, and other non-recurring costs compared to 53.4% on a pro forma basis in the second quarter of 2013. The increase was mainly driven by favorable geographic and product mix. Gross margin also improved sequentially from the first quarter driven by higher percentage of sales in North America.

Non-GAAP operating income in the second quarter 2014 was $3.2 million on a reported basis or an operating margin of 4.9%, compared to $3.4 million or 5.6% on a pro forma basis in the second quarter 2013.

The decrease in operating income and margin was primarily driven by our significant investments in the expansion of our North American sales force. It was included, the first full quarter of CoolTouch expenses. Despite these investments, operating margin improved sequentially from 3.3% in the first quarter of 2014.

On a non-GAAP basis, second quarter of 2014 net income was $2.5 million or $0.07 per share compared to $3 million or $0.08 per share on a pro forma basis in the second quarter of 2013. Our tax rate in the second quarter of 2013 was particularly low which benefited EPS by approximately $0.02 compared to the current quarter tax rate. Normalized for the current quarter tax rate, non-GAAP EPS improved to $0.07 from $0.06 in the year-ago period. Non-GAAP EPS also improved sequentially from $0.04 in the first quarter of 2014.

The non-GAAP operating income and net income results exclude the amortization of acquired intangible assets, stock-based compensation, the income tax adjustments, and other nonrecurring costs.

Going now to Slide 17, our DSO were 81 days in the second quarter of 2014 compared to 76 days in the second quarter of 2013 and 89 days in the first quarter of 2014. During the quarter, we generated $3.7 million in cash from operations. As you can see in the charts on the right side, this was our first positive cash flow quarter after several quarters, both on a reported basis and pro-forma basis, excluding Syneron Beauty.

June 30, 2014 cash and cash equivalents, including short-term bank deposits and investments in marketable securities were $96.4 million. We continue to have a very strong balance sheet with no debt.

Regarding the Iluminage Beauty joint venture, the fair value of our investment in the joint venture remained unchanged and therefore there is no change to the asset value on our balance sheet.

With that, I’ll now turn the call over to the operator to answer any questions you might have. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We will now take our first question from Richard Newitter from Leerink Partners. Please go ahead.

Ravi Misra - Leerink Partners LLC

Hi. Good morning. This is Ravi actually in for Rich. So I’ve two questions. One on UltraShape, one on elure. So moving up the launch to 4Q from 1Q ’15, how should we think about how that acceleration affects: number one, your penetration goals of 20% to 30% share in three years and sort of how does it -- or how do we think about sort of the expense costs associated with the launch in 4Q? And then, secondly regarding elure if you could talk a little bit more about the distribution deals and agreements in Korea and China, how much of a contribution you expect and sort of the nature of that deal there?

Amit Meridor

Okay. So we start with Hugo on.

Hugo Goldman

Hi, Ravi. So answering to the U.S about the effects on the cost right on the acceleration and the answer is that we due to this acceleration we’re going to have in as of Q3 some more investment in the sales force which is PDPs and people around that which will -- we will add some amount of dollars to the expenses between $0.5 million to $1 million per quarter. Bear in mind that means also that going forward in Q4 we will so expect to see some pick up on the revenue. So we’re expecting to see some additional costs in Q3, but no effect in the Q4 operating income.

Amit Meridor

Regarding the elure distribution agreement are regular agreement with distributors. They’re doing a very high investment in marketing for the first few months to promote the brand and the product and then they will start selling. And it’s a regular distribution agreement that we have with most of our distributors around the world.

Ravi Misra - Leerink Partners LLC

Thanks. So just to confirm, so even though there is incremental expenses in the third quarter, do you still -- is there any change to sort of your prior commentary that you were expecting to do better than the 5.1 on the EBIT line in 2013 -- in 2014 or should we adjust our models accordingly?

Amit Meridor

Well, at this point I’d say only for the Q3 certain adjustment. But in terms of the general view, the view is the same view when you look over one quarter is just because of the acceleration we have with this. I’d say positive reason to have certain additional cost in Q3.

Ravi Misra - Leerink Partners LLC

Thanks. I’ll get back in the queue.

Amit Meridor

Thank you.

Hugo Goldman

Thank you.

Operator

(Operator Instructions) We will now take our next question from Anthony Vendetti from Maxim Group. Please go ahead sir.

Anthony Vendetti - Maxim Group LLC

Thank you. Good morning. I just wanted to understand qualitatively the reason that you’re moving UltraShape up a quarter to fourth quarter in terms of commercialization. What are you seeing in the marketplace that’s causing you to readjust your scheduled rollout? And then, on PicoWay, you said you expect FDA clearance by the end of this year. Can you tell us little bit about where you’re in that FDA process? Have you already received back any questions and the confidence enabled and your ability to get that accomplished by the end of the year?

Amit Meridor

Sure. Thank you. Regarding UltraShape as we indicated, we started a control launch in June and we’re starting to receive a positive indication from all the KOL that’s using the UltraShape. That gave us the reason to accelerate the launch to the fourth quarter. Also as we said in the past, we’re hiring the PDPs, that it’s a very key element to support the customers and we were successful in hiring very experienced PDPs that we feel that they can take on themselves as sooner this assignment and we feel we’re much readier in a Q4 and we don’t need to wait for Q1. Also all our marketing material that -- it was a heavily prepared is really underway to be finished by the end of Q3. So those are the main reason why we decided to accelerate it to Q4. As you remember, this is not a new product, this was a product that is in the international and we’re very confident that it will be fully ready in Q4 to start the commercial launch. Regarding Pico, Shimon?

Shimon Eckhouse

Yes. So regarding PicoWay, we based on our experience with FDA as we pointed out in the call. We expect to get clearance by the end of the year with all the uncertainties that are always associated with that. And without going into any details of submission and so on, what I can say is that we have a very good clinical data both in the United States as well as outside of the U.S that makes us feel very confident in the high efficacy and safety of this PicoWay laser in treatment of tattoos and pigmented lesions.

Anthony Vendetti - Maxim Group LLC

Okay. Just a follow-up on the PicoWay is obviously second technology is new technology to the commercial market anyway. Can you talk about the products that Candela had in that category and how this is better and would replace that or would it be complimentary?

Amit Meridor

I would say the following. The main product that Candela in these markets are the ATV laser as well as the GMax Pro which has indications for pigmented lesions which are very popular in Asia, in addition of course to (indiscernible) unique hair removal capability. So we’re going into a market which knows us very well in terms of our capabilities in this pigmented lesion and tattoo removal application. The way we viewed our opportunity is a combination of really being able to sell to customers that are interested in picosecond technology, because of its unique advantages. Combined with what we have to offer, which we believe is a very highly reliable platform as we’ve seen in the development process as well as in the clinical -- extensive clinical work that we’ve done with the product. And we expect to see a mix of new users that maybe interested in this technology as well as existing customers that know the strength of the brand name of Candela in pigmented lesions and tattoos. And of course will be interested in getting the latest and greatest in this technology from us again with this strong reputation that we have in this market, both in the U.S and to a large extend in Asian market. We are also for example, in Japan one of the only ones that has Japanese Ministry of Health clearance for these types of application.

Anthony Vendetti - Maxim Group LLC

Okay, great. Thanks. I’ll hop back in the queue.

Amit Meridor

Thank you.

Shimon Eckhouse

Thank you.

Operator

We will now take our next question from Zack Ajzenman from Griffin Securities. Please go ahead.

Zack Ajzenman - Griffin Securities, Inc.

Thanks. Good morning. First question, follow-up on PicoWay. Can you shed any light on how you’re thinking about pricing for PicoWay currently with some of the shipments in Europe and Asia?

Amit Meridor

Yes, at this point of time, I prefer to really not disclose the numbers exactly. We are as we do in many cases, of course giving -- let's call it preferred sequent to our KOL that worked with us in the past or that were involved in the clinical studies. But as this product is quite unique as we pointed out in the conference call, we believe that it will be priced at a premium price.

Zack Ajzenman - Griffin Securities, Inc.

(Indiscernible) that the product will be accretive to gross margin?

Amit Meridor

I’m not sure we will see much of it this year, but next year it can have an impact, yes.

Hugo Goldman

Yes.

Zack Ajzenman - Griffin Securities, Inc.

Okay. That’s fair. Shifting over to UltraShape, can you provide any commentary on the performance of UltraShape V3 in the international market since the product received FDA approval earlier this year?

Amit Meridor

The UltraShape in the international now for a few good years. We started to have very positive first reaction from several countries when they heard about the FDA. I definitely feel that everybody is very interesting to see how the launch is going on and the marketing material we’re bringing in and definitely the top KOLs that we’re going to use in United States going to be a big supporter for our international. So we don’t see right now a big change, we definitely see the interest and we know that we will use the launch on the KOL and a lot of things that we’re doing in the U.S to regenerate again and boost the sales in the international.

Zack Ajzenman - Griffin Securities, Inc.

Okay. Hugo, this one is for you. So recurring revenue year-over-year up 18%, can you break out the consumables portion within that number?

Hugo Goldman

Yes. So it’s about -- Zack, it’s about half and half, the service and the consumables.

Zack Ajzenman - Griffin Securities, Inc.

Okay. Last question on GentlePRO. So there exists -- a number of existing toenail fungus laser products in the market that have faced recent difficulties. What are some differentiating factors with GentlePRO that may help the product overcome some of the difficulties and better penetrate with the podiatry market?

Amit Meridor

Well, we’re not addressing this application necessarily to the podiatry market. We want -- the way we view it is an additional applicator, an additional application to doctors that already own the product as well as new buyers that when they evaluate what the value of the product is, it will come to the range of applications that they see in their clinic. Regarding the specs of the product, the large spot size is very important. And combined with that of course is the very high reliability and stability of this product which we believe is important in this fungal treatment application.

Zack Ajzenman - Griffin Securities, Inc.

Great. Thank you.

Amit Meridor

Thank you.

Hugo Goldman

Thank you.

Shimon Eckhouse

Thank you, Zack.

Operator

We will now take a follow-up question from Zack Ajzenman from Griffin Securities.

Amit Meridor

Yes, Zack.

Hugo Goldman

Hello, Zack.

Operator

Pardon me, Zack has just exited the queue. We will now take a follow-up question from Ravi Misra from Leerink Partners. Please go ahead sir.

Ravi Misra - Leerink Partners LLC

Hi. Thanks. So a couple of questions on UltraShape. Just curious into any possible UltraShape versus the competition studies to show any of the advantages of your device, any color on what’s being studied and any publication timings on that? And then, what would be the strategy in terms of the UltraShape sales to non core physicians and how do you see non-invasive PAD devices like this playing out in core versus non core? What do you think is the bigger opportunity?

Amit Meridor

So regarding the first question, we have a few for our Key Opinion Leaders that got into the early adoption of UltraShape that own other technologies as well. And initial feedback that we’re getting is very, very encouraging. I mean, what we talked about when we introduce the product first time in the U.S is actually happening. And it’s a real factor (indiscernible) I mean, what they do see is what we advertise which is very, very quick response, the few response in a few week, the ability to treat large as well as small area. And I don’t know if you or others had the opportunity to listen to this piece from ABC, in New York that actually heard yesterday by coincident and see the patient that was treated and have before and after pictures that was taken by the doctor. And again keep in mind, we launched this product and the doctor probably had it for something like one month. So this is very, very exciting. We may end taking advantage of this in something which is more controlled, but at this point in time, we’re really focused on what we can do and not so much on what competition claims they can do. So this is regarding competition. Your second question was …?

Ravi Misra - Leerink Partners LLC

The second question was regarding UltraShape in sort of the strategy between core and non-core physicians and where do you see the larger opportunity?

Amit Meridor

Well to begin with, we’re really focused on core physicians, because they tend to be the Key Opinion Leaders and we see from -- let’s call it the waiting list that we have for the product that most of them are indeed core physicians. But because of the safety and ease of use of this product, we have no doubt that it will fit very nicely into the non-core market as well. As you may know, we’re using guided treatment with this device. So in a way it’s kind of once you start the treatment, once you establish which area you want to treat, the computer and the Ultramatic Vision system that we have on the V3, guides the doctor through or whoever provides the treatment -- through the treatment. And there is no reason whatsoever not to be able to have this doctor in the hands of non-core physicians as well.

Ravi Misra - Leerink Partners LLC

So then that 20% to 30% goal, that includes core and non-core -- is that just core only or core and non-core?

Amit Meridor

It includes both. Its both.

Ravi Misra - Leerink Partners LLC

Great. Thanks.

Amit Meridor

Thank you.

Hugo Goldman

Thank you.

Operator

That will conclude today’s question-and-answer session. I’d now like to turn the call back to Mr. Amit Meridor for closing remarks.

Amit Meridor

I wanted to thank everybody for participating. And I also want to mention again about our Investors Day in September 17 and we will be very happy that all of you will come and will be taking part with our Investor Meeting on the UltraShape launch in September 17. So thank you very much for everybody.

Hugo Goldman

Thank you.

Operator

That will conclude today’s conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.

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