The credit crunch squeezed Cynosure Inc. hard during the third quarter, as sales of its cosmetic laser devices plunged, taking the Westford, Mass.-based company deep into the red.
Cynosure said sales plummeted 53 percent to $17.9 million during the three months ended Sept. 30, compared with $38.2 million during the same period last year. The drop pushed Cynosure to a $1.9 million net loss, compared with net income of $3.2 million during the 2008 third quarter.
Gross profits took a hit as well, sliding 6.5 percent to $10.5 million as operating expenses increased as a percentage of revenues. Total operating expenses were $13.8 million during the quarter, down 31 percent from nearly $20 million in the year-ago period, but up nearly 25 percent as a percentage of revenues compared with Q3 2008.
Cynosure said the gross margin slide reflected higher sales overseas, where prices tend to be lower than in North America.
President and CEO Michael Davin said consumer demand for elective cosmetic procedures seems to be increasing, but the impact of tight credit markets is making it difficult for practioners to borrow enough to afford Cynosure’s equipment. The bright side of the coin is that the company believes underlying demand will support a return to growth once credit conditions ease, Davin said.
Another positive cited by the chief executive is growing international sales. Cynosure won regulatory approvals in South Korea and China during the quarter for its Smartlipo MPX and Affirm devices, respectively. Davin said international sales accounted for 45 percent of total laser revenues during the quarter, up from 29 percent during the third quarter of 2008 but down from 53 percent during the second quarter this year.
And Cynosure’s deal with Unilever to develop over-the-counter light-based cosmetic devices proceeds apace; Davin estimated that the project is two to three years out from commercialization.