Fat freezer Zeltiq turns a surprise profit and climbs almost 30%

Long cleared by the FDA, Zeltiq Aesthetics' ($ZLTQ) fat-freezing CoolSculpting technology gained enough traction last quarter to catapult the company to a surprise profit. The company was so confident, it also raised its 2014 guidance.

Wall Street responded enthusiastically, pushing shares up 29% to a 6-month high of $21.34 on July 30. That gives the company a market cap of about $800 million, close to the $1 billion threshold that enables a broader range of investors to participate.

Zeltiq reported second-quarter EPS of $0.07, well above analyst expectations of a loss of $0.10; revenues came in at $47.1 million, beating the consensus figure of $34.93 million.

The company increased its 2014 revenue guidance range to $160 million to $165 million, up from $137 million to $140 million and more than the consensus of $140.1 million. It also raised its adjusted EBITDA margin into positive territory to 2% from -3%.

Zeltiq attributed the upside surprise to a stronger focus on sales and marketing, a good revenue balance between systems and consumables and the launch of the new CoolSmooth applicator.

"Q2 of 2014 was a landmark quarter for the company as we generated profit for the first time, increased our account utilization, reaped the benefit from our sales and marketing investments and had a very successful new product launch in CoolSmooth," Zeltiq President and CEO Mark Foley said on the conference call.

It shipped 208 systems last quarter, bringing the installed base of CoolSculpting systems to 2,562 across about 2,200 accounts at the end of the quarter. The net revenue split was roughly 54% from systems and 46% from consumables.

Foley cautioned Wall Street not to get too carried away, noting that the inherent seasonality of the business--think summer swimsuit season--will likely result in a sequential decline in revenue for the third quarter. He said that any positive financial contribution for the second half of 2014 would come from fourth-quarter performance.

The FDA approved CoolSculpting for use on the thigh in April; it was already approved to treat the abdomen and flanks. Customers can get two treatments done simultaneously if the provider has two systems, which the company says is helping to drive second or multisystem sales.

- here is the release
- and the transcript

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