Conformis Reports First Quarter 2021 Financial Results
06 May 2021 - 6:05AM
Conformis, Inc. (NASDAQ:CFMS), an orthopedic medical device company
that features personalized knee and hip replacement products,
announced today financial results for the first quarter ended
March 31, 2021.
First Quarter 2021 Summary
- Total revenue of $13.8 million, a decrease of 16%
year-over-year on a reported basis and 17% on a constant currency
basis.
- Product revenue of $13.7 million, a decrease of 16%
year-over-year on a reported basis and 17% on a constant currency
basis.
- Conformis Hip System revenue up 49% year-over-year to $0.7
million.
- Gross margin of 45%, an increase of 80 basis points
year-over-year.
- Total operating expenses remained flat year-over-year.
- Closed on an $85 million stock offering.
- 510(k) application for Conformis’ new standard knee submitted
to the FDA for review.
- Subsequent to quarter-end, received FDA 510(k) clearance for
patient-specific instrumentation associated with the Stryker
development agreement.
Executive Commentary – Mark Augusti, President and
CEO
"The year is off to a good start. We met our expectations for
business activity in the quarter as COVID-19 headwinds impacted
elective procedures to the degree we anticipated. Despite these
continuing headwinds for our industry, we are pleased with the
progress of vaccine adoption nationwide and, as a result, remain
cautiously optimistic that we will see procedure levels get back to
normal in the second half of 2021. This anticipated acceleration in
activity is timed well for our planned product introductions, which
remain on track. We are in a great financial position, especially
in light of the $11 million we expect to receive for achieving the
final milestone under the Stryker development agreement. Having
completed the development phase of the project with Stryker, we can
now focus on manufacturing and supplying patient-specific
instrumentation for Stryker. We will also continue to develop our
hip portfolio, which grew nicely in the quarter, and continue
preparing for the launch of our new knee offering, which will
target the ASC segment.”
|
Three months ended March 31, |
Increase/(decrease) |
($, in
thousands) |
2021 |
2020 |
$ Change |
% Change |
% Change |
|
|
|
|
(as reported) |
(constant currency) |
United States |
$ |
11,604 |
|
$ |
13,827 |
|
$ |
(2,223 |
) |
(16 |
)% |
(16 |
)% |
Rest of world |
2,107 |
|
2,463 |
|
(356 |
) |
(14 |
)% |
(22 |
)% |
Product
revenue |
13,711 |
|
16,290 |
|
(2,579 |
) |
(16 |
)% |
(17 |
)% |
Royalty
revenue |
124 |
|
185 |
|
(61 |
) |
(33 |
)% |
(33 |
)% |
Total
revenue |
$ |
13,835 |
|
$ |
16,475 |
|
$ |
(2,640 |
) |
(16 |
)% |
(17 |
)% |
First Quarter 2021 Highlights
Revenue
- Decrease in revenue year-over-year was driven primarily by
lower volume due to the impact of the COVID-19 pandemic on elective
procedures.
- Conformis Hip System revenue for the first quarter of 2021,
which were all in the United States, were up 49% to $0.7
million.
Gross Margin
- Total gross profit decreased $1.0 million to $6.2 million, or
45% of revenue, in the first quarter of 2021, compared to $7.2
million, or 44% of revenue, in the first quarter of 2020.
- The 80 basis point increase in gross margin year-over-year was
driven primarily by lower cancelled case inventory expense,
partially offset by manufacturing variances as a result of lower
production volume.
Operating Expenses
- Total operating expenses of $15.3 million were flat
year-over-year.
- Sales and marketing expenses declined $1.5 million due to lower
marketing event, program, and advertising expenses, sales
commissions, and travel expenses.
- Research and development expenses increased $0.6 million
primarily driven by personnel costs to support our new product
pipeline.
- General and administrative expenses increased $0.9 million
primarily driven by higher professional fees related to the
protection of our intellectual property.
Net Loss
- Net loss was $11.5 million, or $0.09 per basic and diluted
share, in the first quarter of 2021, compared to a net loss of $9.4
million, or $0.14 per basic and diluted share, in the same period
last year.
- Foreign currency exchange loss was $1.8 million in the first
quarter of 2021, compared to $0.7 million in the same period last
year.
- Weighted average basic and diluted shares outstanding of 131.3
million for the first quarter of 2021, compared to 67.3 million for
the same period last year.
Capital Structure and Liquidity
- Cash and cash equivalents totaled $104.6 million as of
March 31, 2021, compared to $28.7 million as of
December 31, 2020.
- As previously announced on February 12, 2021, the Company
generated gross proceeds of approximately $85 million in an
underwritten public offering of 80,952,381 shares of common stock
at $1.05 per share. Net proceeds were approximately $79.6
million.
Outlook
- We expect our second quarter product revenue to improve
sequentially from the first quarter and to be in the range of $14.0
million to $14.5 million.
- We believe elective procedure volumes will improve in the third
quarter and approach 2019 levels in the fourth quarter as vaccines
become more widely available.
Note on Non-GAAP Financial
Measures
In addition to disclosing financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), the Company provides certain information regarding the
Company's financial results or projected financial results on a
non-GAAP "constant currency basis." This information estimates the
impact of changes in foreign currency rates on the translation of
the Company's current or projected future period financial results
as compared to the applicable comparable period. This impact is
derived by taking the adjusted current or projected local currency
results and translating them into U.S. dollars based upon the
foreign currency exchange rates for the applicable comparable
period. It does not include any other effect of changes in foreign
currency rates on the Company's results or business. Non-GAAP
information is not a substitute for, and is not superior to,
information presented on a GAAP basis. Company management uses
these non-GAAP measures internally to measure operational
performance.
Webcast
As previously announced, Conformis will conduct a webcast today
at 4:30 PM Eastern Time. Management will discuss financial results
and strategic matters. The webcast will be live at
https://edge.media-server.com/mmc/p/vnzdh2h9.
The online archive of the webcast will be available on the
Company's website for 30 days.
About Conformis, Inc.
Conformis is a medical technology company that uses its
proprietary iFit® Image-to-Implant® technology platform to develop,
manufacture, and sell joint replacement implants and instruments
that are individually sized and shaped, which we refer to as
personalized, individualized, or sometimes as customized, to fit
each patient's unique anatomy. Conformis offers a broad line
of sterile, personalized knee and hip implants and single-use
instruments delivered to hospitals and ambulatory surgical
centers. In clinical studies, the Conformis iTotal CR knee
replacement system demonstrated superior clinical outcomes,
including better function and greater patient satisfaction,
compared to traditional, off-the-shelf implants. Conformis owns or
exclusively in-licenses issued patents and pending patent
applications that cover personalized implants and patient-specific
instrumentation for all major joints.
For more information, visit www.conformis.com. To receive
future releases in e-mail alerts, sign up at ir.conformis.com.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this press release about our future expectations,
plans and prospects, including statements about the impact of the
novel coronavirus (COVID-19) pandemic and the actions we are taking
and planning in response, our planned launch of a new program aimed
at developing a knee replacement offering targeted at hospital
outpatient and ambulatory surgery centers, the anticipated timing
of our product launches, whether or when restrictions on elective
surgeries will be relaxed and demand for procedures will increase,
and our financial position and results, total revenue, product
revenue, gross margin, operations and growth, as well as other
statements containing the words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may,"
"might," "plan," "potential," "predict," "project," "should,"
"target," "will," or "would" or the negative of these terms or
other and similar expressions are intended to identify
forward-looking statements within the meaning of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995,
although not all forward-looking statements contain these
identifying words. We may not actually achieve the plans,
intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Actual results or events could differ
materially from the plans, intentions and expectations disclosed in
the forward-looking statements we make as a result of a variety of
risks and uncertainties, including risks related to the novel
coronavirus pandemic and the response to the pandemic; whether our
cash resources will be sufficient to fund our continuing operations
for the periods anticipated; risks related to our estimates and
expectations regarding our revenue, gross margin, expenses, revenue
growth and other results of operations, and the other risks and
uncertainties described in the "Risk Factors" sections of our
Annual Report on Form 10-K for the fiscal year ended December 31,
2020 and other public filings with the U.S. Securities and Exchange
Commission. In addition, the forward-looking statements included in
this press release represent our views as of the date hereof. We
anticipate that subsequent events and developments may cause our
views to change. However, while we may elect to update these
forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date
hereof.
CONFORMIS, INC. AND SUBSIDIARIES |
Consolidated Statements of Operations |
(unaudited) |
(in thousands, except share and per share
data) |
|
|
Three Months Ended March 31, |
|
2021 |
|
2020 |
|
|
|
|
Revenue |
|
|
|
Product |
$ |
13,711 |
|
|
$ |
16,290 |
|
Royalty and licensing |
124 |
|
|
185 |
|
Total revenue |
13,835 |
|
|
16,475 |
|
Cost of revenue |
7,662 |
|
|
9,261 |
|
Gross profit |
6,173 |
|
|
7,214 |
|
|
|
|
|
Operating expenses |
|
|
|
Sales and marketing |
5,113 |
|
|
6,563 |
|
Research and development |
3,540 |
|
|
2,990 |
|
General and administrative |
6,666 |
|
|
5,736 |
|
Total operating expenses |
15,319 |
|
|
15,289 |
|
Loss from operations |
(9,146 |
) |
|
(8,075 |
) |
|
|
|
|
Other income and expenses |
|
|
|
Interest income |
18 |
|
|
35 |
|
Interest expense |
(594 |
) |
|
(574 |
) |
Foreign currency exchange transaction loss |
(1,761 |
) |
|
(714 |
) |
Total other expenses |
(2,337 |
) |
|
(1,253 |
) |
Loss before income taxes |
(11,483 |
) |
|
(9,328 |
) |
Income tax provision |
23 |
|
|
25 |
|
|
|
|
|
Net loss |
$ |
(11,506 |
) |
|
$ |
(9,353 |
) |
|
|
|
|
Net loss per share |
|
|
|
Basic and diluted |
$ |
(0.09 |
) |
|
$ |
(0.14 |
) |
Weighted average common shares
outstanding |
|
|
|
Basic and diluted |
131,300,157 |
|
|
67,274,391 |
|
CONFORMIS, INC. AND SUBSIDIARIES |
Consolidated Balance Sheets |
(in thousands, except share and per share
data) |
|
|
|
|
|
March 31, 2021 |
|
December 31, 2020 |
Assets |
(unaudited) |
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
104,597 |
|
|
$ |
28,673 |
|
Accounts receivable, net |
8,223 |
|
|
8,515 |
|
Royalty and licensing receivable |
131 |
|
|
1,256 |
|
Inventories, net |
13,341 |
|
|
12,585 |
|
Prepaid expenses and other current assets |
2,587 |
|
|
2,315 |
|
Total current assets |
128,879 |
|
|
53,344 |
|
Property and equipment, net |
11,547 |
|
|
12,240 |
|
Operating lease right-of-use assets |
4,903 |
|
|
5,215 |
|
Other Assets |
|
|
|
Restricted cash |
462 |
|
|
462 |
|
Other long-term assets |
229 |
|
|
239 |
|
Total assets |
$ |
146,020 |
|
|
$ |
71,500 |
|
|
|
|
|
Liabilities and stockholder's
equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
5,005 |
|
|
$ |
4,918 |
|
Accrued expenses |
6,357 |
|
|
7,213 |
|
Operating lease liabilities |
1,658 |
|
|
1,620 |
|
Advance on research and development |
2,651 |
|
|
3,168 |
|
Contract liability |
14,000 |
|
|
14,000 |
|
Total current liabilities |
29,671 |
|
|
30,919 |
|
Long-term debt, less debt issuance costs |
25,172 |
|
|
25,003 |
|
Operating lease liabilities |
3,852 |
|
|
4,206 |
|
Total liabilities |
58,695 |
|
|
60,128 |
|
Commitments and
contingencies |
|
|
|
Stockholders' equity |
|
|
|
Preferred stock, $0.00001 par value: |
|
|
|
Authorized: 5,000,000 shares authorized at March 31, 2021 and
December 31, 2020; no shares issued and outstanding as of March 31,
2021 and December 31, 2020 |
— |
|
|
— |
|
Common stock, $0.00001 par value: |
|
|
|
Authorized: 200,000,000 shares authorized at March 31, 2021 and
December 31, 2020; 182,428,111 and 95,546,577 shares issued and
outstanding at March 31, 2021 and December 31, 2020,
respectively |
2 |
|
|
1 |
|
Additional paid-in
capital |
629,622 |
|
|
543,809 |
|
Accumulated deficit |
(539,944 |
) |
|
(528,438 |
) |
Accumulated other
comprehensive loss |
(2,355 |
) |
|
(4,000 |
) |
Total stockholders' equity |
87,325 |
|
|
11,372 |
|
Total liabilities and stockholders' equity |
$ |
146,020 |
|
|
$ |
71,500 |
|
CONTACT:
Investor Relations
ir@conformis.com
(781) 374-5598
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