Non-GAAP Measures

To supplement PhotoMedex’s consolidated financial statements presented in accordance with GAAP, PhotoMedex provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted income and non-GAAP adjusted income per share.

PhotoMedex’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of PhotoMedex’s current financial performance and to provide further information for comparative purposes.

Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, PhotoMedex believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:
 

(Unaudited)
           
Three Months Ended Sept. 30, Nine months ended Sept. 30,
(ooo's) except per share amounts 2012       2011 * 2012       2011 *
 
Net Income as reported $ 7,525 $ 4,249 $ 16,595 $ 2,289
 
Adjustments:
Depreciation and amortization expense 1,402 90 4,176 274
Interest expense, net (6 ) - 401 -
Income tax expense (benefit)   2,500     1,974   3,605   (1,393 )
 
EBITDA $ 11,421 $ 6,313 $ 24,777 $ 1,170
 
Stock-based compensation expense 1,531 1,600 4,819 16,436
Settled Litigation expense - 680 5,595 798
Merger Related Expenses - - - 12,364
Other one- time expenses - - 654 -
       
 
Non-GAAP adjusted income $ 12,952   $ 8,593 $ 35,845 $ 30,768  
Common Shares outstanding at September 30, 2012 21,477 21,477 21,477 21,477
 
Non-GAAP adjusted income per share $ 0.60 $ 0.40 $ 1.67 $ 1.43
 

*As a result of purchase accounting rules, the operating results of the pre-merged PhotoMedex for the three-month and nine -month period ended September 30, 2011 are not included in the consolidated statements of operations for the periods ended September 30, 2011.

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