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Zeltiq Aesthetics Earnings: CoolSculpting Is Still Cool

By Rick Munarriz - Feb 29, 2016 at 6:46PM

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The company behind the CoolScuplting fat cell freezing platform delivers another quarter of growth.

Source: Zetliq Aesthetics. 

Zeltiq Aesthetics (ZLTQ) may help folks slim down, but it's business continues to gain heft. The company behind the CoolSculpting machines that freeze fat cells in a painless and non-invasive procedure posted another blowout financial performance after Monday's market close.

Revenue clocked in at $78.2 million for the fourth quarter, 54% ahead of what it generated during the prior year's holiday quarter. It's a record showing for Zeltiq, and perhaps more importantly for growth investors it's a return to top-line acceleration for the company. Zeltiq's revenue was coming off of back-to-back quarters of year-over-year decelerating growth, but now it's revving up again. 

Zeltiq shipped 387 of its fat cell-freezing contraptions during the period, bringing its installed base to 4,637 CoolSculpting machines. It also launched its CoolMini applicator during the quarter, an add-on to CoolSculpting machines that will help physicians move beyond treating flanks, thighs, and stomachs. Zeltiq sold 1,400 CoolMini applicators, contributing $12 million to its top line. It sees the new applicator that treats smaller areas as a way to gain access to facially focused aesthetic physicians given CoolMini's initial target area of treating double chins. 

Don't read too much into Zeltiq's record profit of $40.6 million or $0.99 a share for the quarter. That was almost entirely the handiwork of a one-time accounting gain. Adjusted net income and EBITDA did move higher since the prior year's fourth quarter, but not as quickly as Zeltiq's impressive top-line spurt. Margins were held back as a result of several items including the accelerated launch of its national direct-to-consumer campaign and higher variable compensation expenses. 

CoolSculpting's success continues to surge. There were 273,112 revenue cycle procedures performed during the period, outpacing the growth in Zeltiq's installed base. Things can get even better this year as new applicators will be able to reduce treatment times to as low as 35 minutes, giving a CoolSculpting-wielding physician the ability to perform even more procedures in any given day. A stand-alone version of the CoolMini applicator as well as other new products and add-ons in the works could also expand Zeltiq's reach.

Zeltiq is initiating guidance for 2016, and it's encouraging. It is targeting $315 million in revenue for the full year with gross margins widening. It sees 55% of its revenue coming from higher-margin consumable revenue, up from 49% in 2015.

Zeltiq's machine has been validated by the marketplace, and now it has come through with a profit in six of the past seven quarters. The stock has fallen out of favor lately. Zeltiq shares closed today -- ahead of its report -- 40% below its all-time high this past summer. This doesn't mean that its fundamentals are faltering.

There may be some investor concern about executive turnover. Zeltiq is also announcing on Monday afternoon that CFO Patrick Williams is leaving the company to pursue other opportunities. He'll be replaced by a seemingly capable replacement with recent CFO experience at a medical devices company, but investors generally don't like to see when the top financial chief of a company moves on. However, with strong growth and a healthy pipeline of catalysts to keep things that way, the slimmed-down stock may not last if it lives up to the recent trend of boosting its guidance as the fiscal year plays out.

Rick Munarriz owns shares of Zeltiq Aesthetics. The Motley Fool recommends Zeltiq Aesthetics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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