First Quarter 2009 Financial Results

Consistent with Cynosure's April 15 announcement, revenues for the three months ended March 31, 2009 were $14.8 million, reflecting the continued effects of the global economic recession and the continued restrictive credit environment in the aesthetic laser industry. Revenues for the comparable period of 2008 were $36.8 million. Gross margin for the first quarter of 2009 was 60.9% of total revenues, compared with 66.3% for the same period of 2008. The quarter-over-quarter decline in gross margin reflected the higher percentage of laser revenue from international markets, which tend to have a lower sales price through third-party distributors than sales made through the North American direct distribution.

Cynosure's net loss for the first quarter of 2009 was $4.0 million, or $0.32 per share, consistent with the anticipated loss range of $3.8 million to $4.3 million the company announced on April 15. For the first quarter of 2008, Cynosure recorded net income of $4.9 million, or $0.38 per diluted share.

"Aesthetic laser capital equipment spending was down significantly in the first quarter of 2009 compared with the same period of 2008, affecting all of our product lines and geographies," said Cynosure President and Chief Executive Officer Michael Davin. "The global recession has restricted credit for many practitioners, and we believe it has discouraged those with borrowing capacity from buying equipment until the economic forecast brightens. The first two months of the first quarter were very slow; however, we were pleased that March order volume picked up slightly. We have continued to reduce expenses in response to our lower revenue levels."

As Cynosure announced last month, in addition to steps it took in the fourth quarter of 2008 the company implemented a number of first quarter cost-cutting measures designed to generate an annualized operating expense savings of between $14 million and $18 million in 2009 compared with 2008 levels. Among these steps, Cynosure reduced its worldwide headcount to 271 employees from 285 at the end of 2008 and further cut planned spending for various programs.

"Although we have moved aggressively to lower costs, we also have focused on retaining the people, technology assets and R&D innovations that we believe are crucial to the long-term success of our company," Davin said. "Our experienced direct sales force, outstanding product portfolio and unique intelligent-delivery systems have helped to establish Cynosure as a leader in the aesthetic industry, and remain vital to our organization as we go forward."

Recent Highlights

-- Physician researchers at the 2009 American Society for Laser Medicine

and Surgery Annual Conference presented positive efficacy data from

post-marketing studies of Cynosure's Smartlipo MPX(TM) laser

lipolysis workstation. The studies demonstrated the ability of the

Smartlipo MPX to tighten skin and shrink skin tissue more efficaciously

than skin treated with liposuction alone.

-- At the American Academy of Dermatology's 67th Annual Meeting,

Cynosure launched the multi-wavelength Elite MPX workstation for

vascular treatment, hair removal and skin rejuvenation. The company

also introduced two new intelligent delivery systems, SmartSense with

ThermaGuide and ThermaView. As the world's first subcutaneous

temperature device for laser lipolysis, SmartSense with ThermaGuide

enables physicians not only to measure the temperature under the skin,

but to set temperature thresholds, thereby controlling energy delivery

for a safer procedure. ThermaView is a thermal camera system that

provides a heat signature map of temperatures within the treatment area

to provide a homogeneous delivery of thermal energy.

-- The United States District Court for the District of Massachusetts

issued a favorable set of rulings in a Markman hearing in the

company's patent infringement lawsuit against CoolTouch Inc. The

purpose of the hearing was to enable the court to determine the meaning

and scope of the patent claims if the case proceeds to trial.

Business Outlook

"Despite a challenging first quarter, we remain encouraged about the prospects for the laser aesthetic industry and are committed to taking the steps necessary to manage the business profitably for the long term," Davin said.