BioLase Technology Inc. has stumbled a couple of times this year despite a surge in sales that has played out during the past three years.
San Clemente-based BioLase, which makes and sells lasers used for root canals and other dental surgeries, slipped four spots to No. 7 on the Business Journal’s list of fastest-growing Orange County-based public companies.
BioLase posted three-year sales growth of 263%. Its revenue has grown from $15.8 million for the year ended June 30, 2002, to $57.4 million this year.
The company has struggled on the profit front in the past year. BioLase posted a net loss of $11.1 million during the first half of the year, versus a profit of $1.5 million last year.
And sales growth is slowing. During the first half of 2005, BioLase’s revenue grew just 7% to $31.4 million, versus a year earlier.
BioLase has been hampered by a couple of issues.
“The combination of the restatement and extended delay in filing our periodic SEC reports has been a substantial disruption to our business activities,” said Robert Grant, BioLase’s chief executive, at the time it reported its first half results.
In May, BioLase gave revised financial statements for 2002, 2003 and the first half of 2004, primarily because of sales tax issues.
Another issue has been on the technology front, with BioLase having some cost issues producing its latest laser device called the Waterlase MD.
“(T)he transition to the Waterlase MD and associated component design changes has significantly affected our operating performance,” Grant said. “These design changes, though costly, are important in order to properly serve our customers.”
Grant was promoted to chief executive at BioLase last October. He replaced Jeffrey Jones, who became vice chairman and chief technology officer.
Grant, who joined BioLase in 2003, had been the company’s chief operating officer and interim chief financial officer.
Meanwhile, the Sarbanes-Oxley Act of 2002, which was enacted as a response to corporate accounting scandals at Enron Corp. and other companies, also nipped at BioLase during the past year.
BioLase said earlier this year that it wouldn’t meet a deadline to file its annual reports with the Securities and Exchange Commission because of Section 404 of Sarbanes-Oxley.
Section 404 is a notorious section of the accounting legislation for small public companies. It requires publicly traded businesses to provide extensive details and an evaluation of its financial reporting controls and accounting procedures, such as how inventory and payroll are monitored.
Nasdaq told BioLase that it could lose its stock listing because of the filing issue related to Sarbanes-Oxley. But BioLase filed all its reports by the end of September, meeting Nasdaq’s requirements.
“The professional service costs and other related expenses associated with the audit and Sarbanes-Oxley heavily impacted our financial performance during the first half of the year,” Grant said. “We can now focus on moving the company toward profitability.”
Shares of BioLase were trading at $6.64 last week, nearly 50% off their 52-week high. The company has a market value of about $150 million.
BioLase’s primary product is the Waterlase, a hard- and soft-tissue laser cutting system that first came on the market nine years ago.
Waterlase uses electromagnetic energy to turn atomized water droplets into smaller energized water particles that remove tissue from a patient’s mouth during dental surgery.
BioLase’s other main product is LaserSmile, which is used in tooth whitening and gum-related procedures. LaserSmile is designed to complement Waterlase.
On the product front, BioLase said it submitted an application to the Food and Drug Administration for Oculase, a laser designed to perform procedures such as cataract removal, skin resurfacing and treatment of wrinkles surrounding the eye and the orbit.
The device maker, according to Grant, expects approval for Oculase will boost sales. He also wants to use its laser technology for more uses outside the dental world.
BioLase began developing and shipping laser-based dental devices in 1991 and went public 11 years ago. The company has 199 workers, including 174 in San Clemente.
THE NUMBERS
Employees: 199
Market value: $154 million
3-year sales growth: 263%
Annual sales through June 30: $57.4 million
Annual net income: $14.5 million
Company: medical device maker
