"Domestically we focused on expanding our efforts as the premier total technology provider in dentistry by intensifying our efforts in selling digital imaging and CAD/CAM intra oral scanners, which is evidenced by the 619% growth for our imaging revenues quarter over quarter. Our Total Technology Solution® is a key component in our strategy to push forward the adoption of lasers as high-tech dentistry and lasers become the standard of care in dentistry versus traditional conventional methods, along with leveraging our significant installed base of diode lasers. We believe that BIOLASE is the only company in North America that currently provides a full line of high-tech products, which includes a full range of all-tissue lasers and diode soft-tissue laser products; CBCT digital imaging products; and CAD/CAM intraoral scanners. We are pleased with the level of laser sales so far this year and we expect the aggressive marketing efforts we undertook in the first quarter to begin to pay off further as we move forward in the second quarter and the rest of 2013," continued Pignatelli.
First Quarter Financial Results
Net revenue for the 2013 first quarter totaled $14.6 million, compared with $12.3 million in the 2012 first quarter. The increase of $2.3 million, or 19%, was driven by increased sales of the Company's core laser systems and imaging products.
Laser system net revenue increased by approximately $814,000, or 9% in the 2013 first quarter as compared to the prior year quarter.
Fred Furry, CFO and COO said, "We are very pleased that the Company obtained FDA clearance for the EPIC soft-tissue diode laser platform for over 80 indications in 19 additional medical markets in April 2013. We expect that the EPIC 10 platform will continue to be a strong contributor to revenue in the second quarter and beyond. It is gratifying to have obtained this clearance so quickly."
Imaging revenues, which included both cone beam and CAD/CAM, totaled approximately $1.0 million, or 7% of net revenue, during the 2013 first quarter as compared to $143,000, or 1% of net revenue, for the prior year quarter.
Pignatelli commented, "We added cone beam digital imaging to our product offerings in late 2011, and further expanded our imaging product offerings with the addition of CAD/CAM intra-oral scanning in late 2012. It is promising to see these product lines continue to grow and we expect this positive trend to continue throughout the year as we gain traction in the market and increase our imaging product offerings. We believe that digital imaging is a tremendous market opportunity and is an excellent complement to our core internally developed laser products."
Gross profit as a percentage of net revenue was 40% as compared to 47% for the prior year quarter. This quarter-over-quarter decrease was primarily due to higher sales of WaterLase and diode systems internationally, which generally carry a lower margin than our direct sales in North America, and the increase in sales of our licensed imaging systems as a proportion of revenue, which also carries lower margins than our laser products.
"Based on our projected revenues and expenditures, we expect that our gross margin will return to historical levels in the range of 44% to 46% for the second quarter and 2013 overall," Furry continued.
Operating expenses totaled $8.6 million, or 59% of net revenues, as compared to $7.4 million, or 60% of net revenues, in the 2012 first quarter. The increase of $1.2 million was primarily driven by a substantial investment in our sales and marketing efforts during the 2013 first quarter and increased legal expenses related to enforcing and protecting our intellectual property ("IP") portfolio.
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