Cynosure Reports Third Quarter 2009 Financial Results

Gross Margin Increases Sequentially to 58.4% as ASPs Remain Stable; Company
Generates $3.6 Million Cash from Operations

WESTFORD, Mass., Oct. 27 /PRNewswire-FirstCall/ -- Cynosure, Inc. (Nasdaq:
CYNO), a leading developer and manufacturer of a broad array of light-based
aesthetic treatment systems, today announced financial results for the three
and nine months ended September 30, 2009.

Third Quarter 2009 Financial Results
Revenues for the three months ended September 30, 2009 were $17.9 million,
compared with $38.2 million for the same period of 2008 and $20.8 million for
the second quarter of 2009. The decrease in revenues from the third quarter
of 2008 reflected the downturn in global economic conditions and the effects
of a highly restrictive credit environment in North America. The decrease in
sequential revenue reflected the typical seasonality of the third quarter.

Gross margin for the third quarter of 2009 was 58.4% of total revenues,
compared with 64.9% for the same period of 2008 and 58.0% for the second
quarter of 2009. The lower gross margin from the year-ago period reflects a
higher percentage of laser revenue from international markets, where sales
prices tend to be lower than in North America. The 40-basis-point increase in
gross margin from the second quarter of 2009 resulted from a higher percentage
of laser revenue from North America, as well as stable average selling prices
across Cynosure's distribution network.

Total operating expenses decreased 31% to $13.8 million for the third quarter
of 2009 from $19.9 million for the same period of 2008, as the company
maintained its focus on reducing costs in response to the current economic
climate. On a sequential basis, the company reduced operating expenses by 15%
from $16.2 million for the second quarter of 2009.

Net loss for the third quarter of 2009 was $1.9 million, or $0.15 per basic
and diluted share, compared with net income of $3.2 million, or $0.25 per
diluted share, for the third quarter of 2008 and a net loss of $2.3 million,
or $0.18 per basic and diluted share, for the second quarter of 2009.

"While consumer demand for aesthetic procedures appears to be regaining
momentum and participation in our training programs is strong, limited access
to credit remains a key hurdle for practitioners across the industry," said
President and Chief Executive Officer Michael Davin. "Many physicians
continue to encounter a restrictive lending environment and a lengthy credit
approval process. We are continuing to work directly with the lending
community to assist our customers -- the majority of whom are physicians --
with securing financing. The positive news we take from the current
environment is that, as credit begins to ease, we believe the underlying
demand is there to support the industry's return to growth. Despite the
challenges of the economic climate, margins increased slightly on a sequential
basis, which underscores the stability of our ASPs."

"In what traditionally has been the weakest quarter for the aesthetic
industry, we were encouraged by the continued progress during the third
quarter of 2009 of our international business, particularly in the Asia
Pacific region," Davin said. "The initiatives we have taken to establish and
grow our direct distribution in countries such as Korea and China, and to
introduce new products there, are yielding positive results. International
revenue accounted for 45% of total laser revenue in the quarter, compared with
29% for the third quarter of 2008 and 53% for the second quarter of this
year."

"On the product development front, our funded development agreement with
Unilever Ltd. to develop light-based devices for the home use personal care
market moved forward in the quarter and we are pleased with our achievements
to date," Davin continued. "Our development partnership is a project we
believe will take two to three years to bring to commercialization. In
Unilever we have an outstanding partner with the consumer marketing and
distribution expertise to make this initiative a success."

Recent Highlights
-- At the Plastic Surgery 2009 meeting, Cynosure introduced the Smartlipo
Triplex(TM), the world's first laser lipolysis workstation featuring
three wavelengths that combine to deliver high-powered fat absorption
and tissue tightening through tissue coagulation. Smartlipo Triplex
adds
a 1440 nm wavelength to the MPX generation of the product, and employs
Cynosure's patented MultiPlex technology to combine the benefits of
multiple wavelengths in a single laser output.
-- Cynosure announced two key regulatory approvals in the Asia Pacific
region. The company received approval to market its Smartlipo MPX(TM)
LaserBodySculpting(SM) Workstation in Korea and its Affirm(TM)
Anti-Aging Workstation in the People's Republic of China.

-- The company named Paul B. Cardarelli to the new position of Vice
President of Business Development. Cardarelli is responsible for
day-to-day management of Cynosure's funded development agreement with
Unilever Ltd.

Nine-Month Results
For the nine months ended September 30, 2009, revenues were $53.6 million
compared with $114.2 million for the same period in 2008. Gross profit margin
for the first nine months of 2009 decreased to 58.9% of total revenues,
compared with 66.2% for the same period in 2008. Net loss for the first nine
months of 2009 was $8.3 million, or $0.65 per basic and diluted share,
compared with net income of $12.7 million, or $0.99 per diluted share, for the
same period in 2008.

Business Outlook
"We are on track to achieve our target operating expense savings of between
$14 million and $18 million for 2009," Davin said. "The cost-reduction
program we implemented beginning in early 2009 has enabled us to cut operating
expenses by $11.8 million -- more than 20% -- through the first nine months of
the year, compared with the same period in 2008. At the same time, we
maintained our strong balance sheet, with cash, cash equivalents and
investments increasing $1.9 million for the quarter ended September 30, 2009
to $90.5 million.

"Although obtaining credit for capital equipment purchases remains difficult
for many practitioners, we are encouraged by the level of activity and
interest we are seeing in North America and continuing international traction,
particularly in Asia. In the near term, the lending environment may continue
to create challenges for the company and our industry, but our balance sheet
and drive to sustain technology leadership in applications such as
LaserBodySculpting give us a high level of confidence for the quarters ahead,"
Davin concluded.

Conference Call
Cynosure will host a conference call for investors today at 9:00 a.m. ET. On
the call, Michael Davin and Timothy Baker, the company's Executive Vice
President and Chief Financial Officer, will discuss the company's financial
results and provide a business outlook.

Those who wish to listen to the conference call webcast should visit the
"Investor Relations" section of the company's website at www.cynosure.com.
The live call can also be accessed by dialing (877) 407-5790 or (201)
689-8328. If you are unable to listen to the live call, the webcast will be
archived on the company's website.

About Cynosure, Inc.
Cynosure, Inc. develops and markets aesthetic treatment systems that are used
by physicians and other practitioners to perform non-invasive and minimally
invasive procedures to remove hair, treat vascular and pigmented lesions,
rejuvenate the skin, liquefy and remove unwanted fat through laser lipolysis
and temporarily reduce the appearance of cellulite. Cynosure's products
include a broad range of laser and other light-based energy sources, including
Alexandrite, pulse dye, Nd:YAG and diode lasers, as well as intense pulsed
light. Cynosure was founded in 1991. For corporate or product information,
contact Cynosure at 800-886-2966, or visit www.cynosure.com.

Forward-Looking Statements
Any statements in this press release about future expectations, plans and
prospects for Cynosure, Inc., including statements about the company's ability
to achieve targeted operating expense savings, and expectations for increased
industry demand, as well as other statements containing the words "believes,"
"anticipates," "plans," "expects," "will" and similar expressions, constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those indicated by such forward-looking statements as a result of various
important factors, including the global economic recession and its effects on
the aesthetic laser industry, Cynosure's history of operating losses, its
reliance on sole source suppliers, the inability to accurately predict the
timing or outcome of regulatory decisions, changes in consumer preferences,
competition in the aesthetic laser industry, economic, market, technological
and other factors discussed in Cynosure's most recent Annual Report on Form
10-K and Quarterly Report on Form 10-Q, which are filed with the Securities
and Exchange Commission. In addition, the forward-looking statements included
in this press release represent Cynosure's views as of the date of this press
release. Cynosure anticipates that subsequent events and developments will
cause its views to change. However, while Cynosure may elect to update these
forward-looking statements at some point in the future, it specifically
disclaims any obligation to do so. These forward-looking statements should
not be relied upon as representing Cynosure's views as of any date subsequent
to the date of this press release.

Contact:
Scott Solomon
Vice President
Sharon Merrill Associates, Inc.
617-542-5300
cyno@investorrelations.com

Consolidated Statements of Income
---------------------------------
(In thousands, except per share data)

Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)

Revenues $17,937 $38,209 $53,566 $114,167
Cost of revenues 7,460 13,396 21,997 38,645
----- ------ ------ ------
Gross profit 10,477 24,813 31,569 75,522

Operating expenses
Selling and marketing 8,743 13,911 29,696 41,190
Research and development 1,564 1,992 5,001 5,606
General and administrative 3,511 3,983 11,440 11,108
----- ----- ------ ------

Total operating expenses 13,818 19,886 46,137 57,904

(Loss) income from operations (3,341) 4,927 (14,568) 17,618

Interest income, net 83 549 454 1,977
Other income (expense), net 371 (425) 705 9
--- ---- --- -

(Loss) income before income
taxes (2,887) 5,051 (13,409) 19,604

Income tax (benefit)
provision (972) 1,888 (5,149) 6,912
---- ----- ------ -----

Net (loss) income $(1,915) $3,163 $(8,260) $12,692
======= ====== ======= =======

Diluted net (loss)
income per share $(0.15) $0.25 $(0.65) $0.99
====== ===== ====== =====
Diluted weighted average
shares outstanding 12,712 12,854 12,708 12,806
====== ====== ====== ======

Basic net (loss) income
per share $(0.15) $0.25 $(0.65) $1.01
====== ===== ====== =====
Basic weighted average
shares outstanding 12,712 12,642 12,708 12,542
====== ====== ====== ======

To supplement our consolidated financial statements presented in
accordance with GAAP, Cynosure uses the following measures defined
as non-GAAP financial measures by the SEC: non-GAAP gross profit,
non-GAAP income from operations, non-GAAP net income and non-GAAP
diluted earnings per share. The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP. In addition, the non-GAAP financial measures
included in this press release may be different from, and therefore
not comparable to, similar measures used by other companies. Although
certain non-GAAP financial measures used in this release exclude the
accounting treatment of stock-based compensation, these non-GAAP
measures should not be relied upon independently as they ignore the
contribution to our operating results that is generated by the
incentive and compensation effects of the underlying stock-based
compensation programs.

Cynosure's management believes that these non-GAAP financial measures
provide meaningful supplemental information regarding our performance
by excluding certain expenses and expenditures that may not be
indicative of our core business operating results. Cynosure believes
that both management and investors benefit from referring to these
non-GAAP financial measures in assessing Cynosure's performance and
when planning, forecasting and analyzing future periods. These non-GAAP
financial measures also facilitate management's internal comparisons to
Cynosure's historical performance and our competitors' operating
results. Cynosure believes that these non-GAAP measures are useful to
investors in allowing for greater transparency with respect to
supplemental information used by management in its financial and
operational decision making.

Reconciliation of GAAP Income Statement Measures to Non-GAAP Income
Statement Measures (Unaudited)
-------------------------------------------------------------------
(In thousands, except per share data)

Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----

Gross profit $10,477 $24,813 $31,569 $75,522
------- ------- ------- -------

Non-GAAP adjustments to
gross profit:

Stock-based compensation 120 145 383 411
--- --- --- ---

Total Non-GAAP adjustments
to gross profit 120 145 383 411
--- --- --- ---

Non-GAAP Gross profit $10,597 $24,958 $31,952 $75,933
======= ======= ======= =======

Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----

(Loss) income from
operations $(3,341) $4,927 $(14,568) $17,618
------- ------ -------- -------

Non-GAAP adjustments to
(loss) income from operations:

Stock-based compensation 1,464 2,096 5,110 5,663
----- ----- ----- -----

Total Non-GAAP adjustments
to (loss) income from
operations 1,464 2,096 5,110 5,663
----- ----- ----- -----

Non-GAAP (Loss) income
from operations $(1,877) $7,023 $(9,458) $23,281
======= ====== ======= =======

Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----

Net (loss) income $(1,915) $3,163 $(8,260) $12,692
------- ------ ------- -------

Non-GAAP adjustments to
net (loss) income:

Stock-based compensation 1,464 2,308 5,110 5,875
Income tax effect of
Non-GAAP adjustments (460) (762) (2,162) (2,261)
---- ---- ------ ------

Total Non-GAAP adjustments
to net (loss) income 1,004 1,546 2,948 3,614
----- ----- ----- -----

Non-GAAP Net (loss) income $(911) $4,709 $(5,312) $16,306
===== ====== ======= =======

Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----

Diluted net (loss) income
per share $(0.15) $0.25 $(0.65) $0.99
------ ----- ------ -----

Stock-based compensation 0.12 0.18 0.40 0.46

Income tax effect of
Non-GAAP adjustments $(0.04) (0.06) (0.17) (0.18)
------ ----- ----- -----

Total Non-GAAP adjustments
to net (loss) income $0.08 0.12 $0.23 0.28
----- ---- ----- ----

Non-GAAP Diluted net (loss)
income per share $(0.07) $0.37 $(0.42) 1.27
====== ===== ====== ====

Weighted average shares used
to compute diluted net (loss)
income per share 12,712 12,854 12,708 12,806
====== ====== ====== ======

Weighted average shares used
to compute Non-GAAP diluted
net (loss) income per share 12,712 12,854 12,708 12,806
====== ====== ====== ======

Condensed Consolidated Balance Sheet (Unaudited)
------------------------------------------------
(In thousands)
September 30, December 31,
2009 2008
---- ----
(unaudited)
Assets:
Cash, cash equivalents and marketable
securities $69,953 $74,369
Short-term investments and
related financial instruments 18,587 -
Accounts receivable, net 14,975 25,156
Amounts due from related parties 49 40
Inventories 25,724 30,248
Deferred tax asset, current portion 6,871 6,825
Prepaid expenses and other current assets 7,857 4,331
----- -----
Total current assets 144,016 140,969
Property and equipment, net 10,080 8,422
Long-term investments and related
financial instruments 2,005 21,082
Other noncurrent assets 2,906 2,649
----- -----
Total assets $159,007 $173,122
======== ========

Liabilities and stockholders' equity:
Accounts payable and accrued expenses $14,071 $20,697
Amounts due to related parties 1,944 6,083
Deferred revenue 3,990 4,296
Capital lease obligations 299 398
--- ---
Total current liabilities 20,304 31,474

Capital lease obligations, net of
current portion 231 436
Deferred revenue, net of current portion 504 407
Other long-term liabilities 429 451
--- ---
Total stockholders' equity 137,539 140,354
------- -------
Total liabilities and stockholders' equity $159,007 $173,122
======== ========

SOURCE Cynosure, Inc.

Scott Solomon, Vice President, Sharon Merrill Associates, Inc., for Cynosure,
Inc., +1-617-542-5300, cyno@investorrelations.com