May 07, 2009 at 16:05 PM EDT
BIOLASE Reports First Quarter Results

IRVINE, CA -- (Marketwire) -- 05/07/09 -- BIOLASE Technology, Inc. (NASDAQ: BLTI), the world's leading dental laser company, today reported operating results for its first quarter ended March 31, 2009.

Net revenue for this year's first quarter was $6.6 million, compared to $19.0 million in the prior year period. Revenues in the first quarter continued to be impacted by the economy and credit markets, while the full impact of BIOLASE's revised domestic and international distribution agreement with Henry Schein was not felt because the agreement was signed late in the quarter. Sales were also impacted by the closure of unprofitable foreign subsidiaries and the start-up timing on new international relationships.

Gross margin as a percentage of net revenue for the 2009 first quarter was 27 percent, as compared with 50 percent of net revenue for the 2008 first quarter. The decrease was due primarily to a one-time write down of inventories related to the multiple international subsidiary closures and excess inventory created from a sales mix shift toward the new Waterlase® MD Turbo(TM) and the ezlase diode laser. Gross margins were also impacted by lower volume, lower average net pricing and promotion costs being spread over fewer units and a decrease in licensing and royalty revenues. The impact of fixed departmental cost reductions that were completed during the quarter were not fully realized because some of those reductions were implemented at the end of the quarter.

BIOLASE Chief Executive Officer David M. Mulder said, "Difficult economic conditions hampered our closing rates for lasers during the first quarter. Those economic conditions have not dissipated, but the recent launch of the Waterlase MD Turbo helped improve sales late in the quarter. Given that the last month in any given quarter has generally been the strongest for BIOLASE, we were even more encouraged that April end-user domestic sales exceeded January and February combined. Part of that upswing is also due to aggressive new sales and marketing programs we have recently designed and have only just begun to launch with our partner, Henry Schein. We are very pleased with the minimum purchase agreement with Henry Schein that ensures cash flows during these challenging times, but we are even more pleased with our combined full focus on selling more lasers and spreading the benefits of Waterlase*Dentistry across the world."

Highlights of the quarter and subsequent to the quarter end include:

--  The global launch of BIOLASE's new Waterlase MD Turbo hard and soft
    tissue dental laser system, which offers a cutting speed for cutting cavity
    preparations that rivals the old technology of the conventional high-speed
    drill;
--  The global launch of the new Waterlase MD Turbo upgrade kit for the
    Waterlase® MD, which is in back-order status and will begin shipping in
    mass quantities in late May;
--  A restructured multi-year distribution agreement with Henry Schein,
    Inc. that calls for minimum bi-monthly purchases totaling $42.7 million
    over the initial 14-month term starting at the end of February, and
    escalating levels of sales in each of the two additional optional 12-month
    terms;
--  Closure of the international subsidiaries that had been consuming cash
    resources and producing yearly losses of more than $4 million, in addition
    to rapidly advancing plans to replace many of those territories with the
    Henry Schein international organization;
--  Significant headcount and cost cutting activities that have already
    been implemented in order to better align corporate cost structure with
    minimum sales levels;
--  The national broadcast on "The Doctors" TV show of a live pediatric
    cavity preparation performed using the Waterlase MD with no shots, drills
    or discomfort, which can be viewed at www.biolase.com;
--  The settlement agreement with National Laser Technology (NLT)
    resolving claims and counterclaims in a pending lawsuit concerning NLT's
    sale of used BIOLASE dental lasers;
--  The receipt of 510(k) clearance from the U.S. Food and Drug
    Administration (FDA) to market its ezlase diode laser system for
    therapeutic applications including temporary pain relief.  The cleared
    indications are broad enough to cover medical and dental fields;
--  A shift in marketing strategy to a hard focus on the additional
    revenues that a fully trained Waterlase*Dentist can earn today, generally
    an extra $70,000 to $150,000 per year with additional procedures, improved
    efficiencies and added patient referrals; and
--  The launch of new weekly webinars to review key areas of dentistry
    where BIOLASE products can be used, complete with demonstrations, which can
    be viewed at www.biolase.com.  Currently announced webinars cover
    procedures and benefits for orthodontists, endodontists, pediatric
    dentists, periodontists and oral surgeons.
    

Mulder continued, "Moving past the transitions in the first quarter, we are looking to the rest of the coming year from a position of increasing strength, despite the challenges that exist. We fully intend to maintain our worldwide market share lead in laser dentistry, as well as to continue our tradition of leading innovation and product developments in the dental and medical laser field. We expect the lower cost structure we have largely implemented in the first quarter to help drive positive cash flow in the coming quarters and to better position BIOLASE to prosper as the economy improves and revenues begin to rise again."

Operating expenses of $6.7 million in this year's first quarter included severance and related expenses of $602,000 associated with the termination of the Company's former Chief Executive Officer in March and reducing its foreign subsidiaries' operations.

Other income in the first quarter included a gain on foreign currency transactions of $315,000, down from $616,000 reported in the same period of 2008. This reduction was the result of a restructuring of inter-company payables from the foreign subsidiaries of BIOLASE into capital contributions in October. Net loss for the first quarter of 2009 was $4.7 million, or $0.19 loss per share, compared with net income of $26,000, or $0.00 per share, in the prior year period.

As of March 31, 2009, the balance sheet showed cash and cash equivalents of $1.8 million, total assets of $21.9 million and total stockholders' equity of $4.9 million. The Company's line of credit with Comerica Bank was completely repaid during the quarter with cash on hand and closed, and the Company remains bank debt free. The Company also paid down some $3.2 million in accounts payable over the quarter and is in good standing with its vendors. The Company believes that with its minimum purchase agreement with bi-monthly purchases and its lower cost structure that it will have sufficient resources to meet obligations and sustain operations.

Mulder concluded, "The old working capital model of BIOLASE focused on high quarter-end stocking purchases that provided large quarter-end cash balances that declined throughout the following quarter when the process was repeated. Our new process consists of steady distributor orders throughout a quarter, providing much more predictability in production and working capital needs. In April, cash balances improved from $1.8 million to $2.6 million. We have survived one of the most difficult quarters in the Company's history and rapidly emerged with a model that we believe can generate cash."

Conference Call

As previously announced, the Company will host a conference call today at 4:30 p.m. Eastern Time to discuss its operating results for the first quarter ended March 31, 2009, and to answer questions. The dial-in number for the call is toll-free 1-877-941-1468 or toll/international 1-480-629-1990. The live webcast and archived replay of the call can be accessed in the Investors section of the BIOLASE website at www.biolase.com.

About BIOLASE Technology, Inc.

BIOLASE Technology, Inc. (http://www.biolase.com), the world's leading dental laser company, develops, manufactures and markets Waterlase technology and lasers and related products that advance the practice of dentistry and medicine. The Company's products incorporate patented and patent pending technologies designed to provide clinically superior performance with reduced pain, faster and biological recovery times. BIOLASE's principal products are dental laser systems that perform a broad range of dental procedures, including cosmetic and complex surgical applications. Other products under development address ophthalmology, pain management and other medical and consumer markets.

This press release may contain forward-looking statements within the meaning of safe harbor provided by the Securities Reform Act of 1995 that are based on the current expectations and estimates by our management. These forward-looking statements can be identified through the use of words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," and variations of these words or similar expressions. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks, uncertainties and other factors which may cause the Company's actual results to differ materially from the statements contained herein, and are described in the Company's reports it files with the Securities and Exchange Commission, including its annual and quarterly reports. No undue reliance should be placed on forward-looking statements. Such information is subject to change, and we undertake no obligation to update such statements.

                      BIOLASE TECHNOLOGY, INC.

           CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
               (in thousands, except per share data)


                                                      Three Months Ended
                                                           March 31,
                                                      --------------------
                                                        2009       2008
                                                      ---------  ---------
Products and services revenue                         $   6,119  $  18,037
License fees and royalty revenue                            475      1,004
                                                      ---------  ---------
Net revenue                                               6,594     19,041
Cost of revenue                                           4,826      9,459
                                                      ---------  ---------
Gross profit                                              1,768      9,582
                                                      ---------  ---------
Operating expenses:
  Sales and marketing                                     3,045      5,605
  General and administrative                              2,569      3,077
  Engineering and development                             1,083      1,461
                                                      ---------  ---------
    Total operating expenses                              6,697     10,143
                                                      ---------  ---------
Loss from operations                                     (4,929)      (561)
                                                      ---------  ---------
Gain on foreign currency transactions                       315        616
Interest income                                               1         58
Interest expense                                            (30)       (24)
                                                      ---------  ---------
Non-operating income, net                                   286        650
                                                      ---------  ---------
(Loss) Income before income tax provision                (4,643)        89
Income tax provision                                         33         63
                                                      ---------  ---------
Net (loss) income                                     $  (4,676) $      26
                                                      =========  =========
Net (loss) income per share:
  Basic                                               $   (0.19) $    0.00
                                                      =========  =========
  Diluted                                             $   (0.19) $    0.00
                                                      =========  =========
Shares used in the calculation of net (loss) income
 per share:
  Basic                                                  24,244     24,056
                                                      =========  =========
  Diluted                                                24,244     24,295
                                                      =========  =========





                       BIOLASE TECHNOLOGY, INC.

                CONSOLIDATED BALANCE SHEETS (Unaudited)
                 (in thousands, except per share data)

                                                     March 31, December 31,
                                                       2009        2008
                                                    ----------  ----------
                       ASSETS
Current assets:
   Cash and cash equivalents                        $    1,810  $   11,235
   Accounts receivable, less allowance of $657 and
    $526 in 2009
    And 2008, respectively                               1,728       3,758
   Inventory, net                                       10,493      12,410
   Prepaid expenses and other current assets             1,383       1,391
                                                    ----------  ----------
     Total current assets                               15,414      28,794

Property, plant and equipment, net                       2,659       3,040
Intangible assets, net                                     570         613
Goodwill                                                 2,926       2,926
Deferred tax asset                                          13          29
Other assets                                               306         306
                                                    ----------  ----------
     Total assets                                   $   21,888  $   35,708
                                                    ==========  ==========

       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Line of credit                                   $       --  $    5,404
   Accounts payable                                      4,265       7,509
   Accrued liabilities                                   7,958       8,255
   Deferred revenue, current portion                     2,264       2,603
                                                    ----------  ----------
     Total current liabilities                          14,487      23,771
Deferred tax liabilities                                   393         376
Deferred revenue, long-term                              1,875       1,875
Other liabilities, long-term                               269         296
                                                    ----------  ----------
     Total liabilities                                  17,024      26,318
                                                    ----------  ----------
Stockholders' equity:
   Preferred stock, par value $0.001, 1,000
    shares authorized, no shares issued and
    outstanding                                             --          --
   Common stock, par value $0.001, 50,000 shares
    authorized; 26,208 and 26,208 shares issued and
    24,244 and 24,244 shares outstanding
    in 2009 and 2008, respectively                          27          27
   Additional paid-in capital                          116,166     115,698
   Accumulated other comprehensive loss                   (505)       (187)
   Accumulated deficit                                 (94,425)    (89,749)
                                                    ----------  ----------
                                                        21,263      25,789
   Treasury stock (cost of 1,964 shares
    repurchased)                                       (16,399)    (16,399)
                                                    ----------  ----------
     Total stockholders' equity                          4,864       9,390
                                                    ----------  ----------
     Total liabilities and stockholders' equity     $   21,888  $   35,708
                                                    ==========  ==========


For further information, please contact:
Jill Bertotti
Allen & Caron
+1-949-474-4300

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