- Reported Sales Up 27% to $33.9 Million;
Success of ‘Switch Your Tox’ Promotion Contributes to $3.5 Million
Incremental Increase in Deferred Revenue Over Q2 and Understates
Strength of Results
- ‘Switch Your Tox’ Drives Record Consumer
Rewards Redemptions and New Purchasing Accounts
- Reiterates Full-Year 2022 Net Revenue Guidance
at Top End of $143 to $150 Million Range; Lowers Non-GAAP Operating
Expense Guidance to Lower Half of Range
- Strong Cash Position of $65.6 Million Expected
to Fund Company to Breakeven
Evolus, Inc. (NASDAQ: EOLS), a performance beauty company with a
customer-centric approach focused on delivering breakthrough
products, today reported financial results for the third quarter
ended September 30, 2022 and provided a business update.
“This quarter we reported strong top-line growth and continued
to gain market share while carefully managing our operating
expenses as we advance toward profitability,” said David Moatazedi,
President and Chief Executive Officer. “Demand for Jeuveau®
remained strong even with anticipated seasonality and the return of
summer travel. We remain confident we can achieve the top end of
our 2022 sales guidance range of $143 to $150 million equating to a
year-over-year growth rate of approximately 50%, which is roughly
triple the projected toxin market growth rate.”
Moatazedi continued, “Perhaps the most significant highlight of
the third quarter was the highly successful launch of our ‘Switch
Your Tox’ promotional campaign. ‘Switch Your Tox’ helped drive an
above-market 27% year-over-year growth rate, and when factoring for
the above-normal deferred revenue this campaign required, our
growth rate would have been even stronger. This campaign also
helped generate the largest number of new accounts we have added in
three years and drove a record 100,000 consumer redemptions in our
loyalty program in the quarter. Importantly, ‘Switch Your Tox’
redemptions will continue through year-end, providing continued
momentum into the fourth quarter.”
Third Quarter 2022 Highlights and Recent Developments
- Aided by the recently launched ‘Switch Your Tox’ promotional
campaign, the company’s lead sales and marketing metrics
demonstrated continued momentum in Evolus’ business during the
third quarter.
- Evolus added 650 new customer accounts in the third quarter,
bringing the total base since launch to more than 8,800 purchasing
customers with a reorder rate that remains steady at above
70%.1
- Overall membership in the Evolus Rewards program grew to nearly
450,000 consumers. For the quarter, total redemptions in Evolus
Rewards drove a record 100,000 consumers with an equal
representation of new and existing users returning for repeat
treatments, demonstrating strong loyalty to Jeuveau® and
illustrating the power of the program to motivate consumers.
- As previously reported, the company completed patient
enrollment in its Phase II “extra strength” Jeuveau® clinical
study. A presentation of interim data is planned for early 2023 at
one of the largest aesthetics meetings in the world. This study
provides Evolus with the opportunity to offer the first
multi-strength neurotoxin, giving customers and consumers increased
treatment options.
- During the quarter, Evolus launched commercial operations in
Great Britain, the single largest market for aesthetic neurotoxins
in the European region, and shipped the first customer orders for
Nuceiva®. During 2023, the company expects to enter additional
countries in Europe and looks forward to broadening its overall
geographic presence even further.
Third Quarter 2022 Financial Results
- Total net revenues for the third quarter of 2022 increased 27%
to $33.9 million from $26.7 million in the third quarter of 2021
driven almost entirely by higher volumes of Jeuveau®. Compared to
the second quarter, the company deferred an additional $3.5 million
of revenue in the third quarter largely attributable to the ‘Switch
Your Tox’ promotional campaign, which it believes understated the
actual strength of its reported results. The company expects the
majority of this additional deferred revenue will be realized in
the fourth quarter of this year.
- Gross profit margin and adjusted gross profit margin were 58.0%
and 60.2%, respectively, both of which were impacted by the higher
settlement royalty rates that concluded in mid-September 2022.
Adjusted gross profit margin excludes amortization of intangible
assets.
- Operating expenses decreased to $51.8 million in the third
quarter of 2022 from $58.5 million in the second quarter of
2022.
- Non-GAAP operating expenses decreased to $33.7 million in the
third quarter of 2022 from $35.4 million in the second quarter of
2022 primarily due to lower marketing and distribution expenses.
Non-GAAP operating expenses exclude product cost of sales,
revaluation of the contingent royalty obligation expense, IPR&D
expense, stock-based compensation expense, and depreciation and
amortization.
- Loss from operations was $17.9 million in the third quarter of
2022 compared to $21.3 million in the second quarter of 2022.
Non-GAAP loss from operations in the third quarter of 2022 was
$13.3 million compared to $14.1 million in the second quarter of
2022. Non-GAAP loss from operations excludes revaluation of the
contingent royalty obligation expense, IPR&D expense,
stock-based compensation expense, and depreciation and
amortization.
- Cash and cash equivalents at September 30, 2022 were $65.6
million, compared to $84.5 million at June 30, 2022. Cash used
during the quarter included inventory payments of $14.2 million to
support the growth of the business, and net royalty and interest
payments totaling $10.3 million. For the third quarter of 2022, net
cash used for operating activities was $17.1 million, which was
$3.8 million less than the amount used in the second quarter of
2022, demonstrating the company’s continued commitment to carefully
managing operating expenses and keeping it on the path to achieving
sustainable positive cash flow. Evolus continues to expect that its
existing cash balance will fund current operations through
breakeven.
Outlook
- Based on its year-to-date performance and confidence in the
resilience of the aesthetic neurotoxin market, the company
continues to project full-year 2022 sales at the top end of its
guidance range of $143 to $150 million, which includes a minimal
contribution from international markets.
- Evolus continues to expect its full year adjusted gross profit
margin to be between 58% and 61% with a fourth quarter rate of 68%
to 71% reflecting the settlement royalty rate decrease in
September.
- The company now expects full-year non-GAAP operating expenses
to be in the lower half of its previous guidance range of $135 to
$140 million. Non-GAAP operating expenses exclude product cost of
sales, revaluation of the contingent royalty obligation expense,
IPR&D expense, stock-based compensation expense, and
depreciation and amortization.
Conference Call Information
Management will host a conference call and live webcast to
discuss Evolus’ financial results today at 4:30 p.m. ET. To
participate in the conference call, dial (877) 407-6184 (U.S.) or
(201) 389-0877 (international) or connect to the live webcast via
the link on the Investor Relations page of our website at
www.evolus.com.
Following the completion of the call, an audio replay can be
accessed for 48 hours by dialing (877) 660-6853 (U.S.) or (201)
612-7415 (international) and using conference number 13733400. An
archived webcast, which will remain available for 30 days, can also
be accessed on the Investor Relations page of our website at
www.evolus.com.
About Evolus, Inc.
Evolus (Nasdaq: EOLS) is a performance beauty company evolving
the aesthetic neurotoxin market for the next generation of beauty
consumers through its unique, customer-centric business model and
innovative digital platform. Our mission is to become a global,
multi-product aesthetics company based on our flagship product,
Jeuveau® (prabotulinumtoxinA-xvfs), the first and only neurotoxin
dedicated exclusively to aesthetics and manufactured in a
state-of-the-art facility using Hi-Pure™ technology. Visit us at
www.evolus.com, and follow us on LinkedIn, Twitter, Instagram or
Facebook.
Forward-Looking Statements
This press release contains forward-looking statements as
defined under the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties, including statements based on
our current expectations, assumptions, estimates and projections
about future events, our business, financial condition, results of
operations and prospects, our industry and the regulatory
environment in which we operate. Any statements contained herein
that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “predict,” “project,” “should,” “will,” “would” or the
negative of those terms, or other comparable terms intended to
identify statements about the future. The company’s forward-looking
statements include, but are not limited to, statements related to
the company’s financial outlook for 2022, expectations regarding
the company’s cash position and expectations regarding share
growth, market conditions, international product launches and our
ongoing clinical trial.
The forward-looking statements included herein are subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by the forward-looking
statements. These risks and uncertainties, all of which are
difficult or impossible to predict accurately and many of which are
beyond our control, include, but are not limited to uncertainties
associated with our ability to comply with the terms and conditions
in the Allergan/Medytox Settlement Agreements, our ability to fund
our future operations or obtain financing to fund our operations,
the continued impact of COVID-19 or other outbreaks of contagious
diseases on our business, unfavorable global economic conditions
and the impact on consumer discretionary spending, uncertainties
related to customer and consumer adoption of Jeuveau®, the
efficiency and operability of our digital platform, competition and
market dynamics, our ability to successfully launch and
commercialize our products in new markets, our ability to maintain
regulatory approvals of Jeuveau® or obtain regulatory approvals for
new product candidates or indications and other risks described in
our filings with the Securities and Exchange Commission, including
in the section entitled “Risk Factors” in our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2022 filed with the
Securities and Exchange Commission on August 2, 2022. These filings
can be accessed online at www.sec.gov. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Except as required by law, we
undertake no obligation to update or revise any forward-looking
statements to reflect new information, changed circumstances or
unanticipated events. If we do update or revise one or more of
these statements, investors and others should not conclude that we
will make additional updates or corrections.
Use of Non-GAAP Financial Measures
Evolus’ financial results are prepared in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). This press release and the reconciliation tables
included in the financial schedules below include adjusted gross
profit, adjusted gross profit margin, non-GAAP operating expenses
and non-GAAP loss from operations. Adjusted gross profit is
calculated as gross profit excluding amortization of an intangible
asset and, as applicable, the one-time settlement payment from
Daewoong. Adjusted gross profit margin is defined as adjusted gross
profit as a percentage of total net revenues. Non-GAAP operating
expenses and non-GAAP loss from operations exclude (i) product cost
of sales, in the case of non-GAAP operating expenses only, (ii)
in-process research and development, (iii) one-time settlement
payment from Daewoong, (iv) the revaluation of contingent royalty
obligations, (v) stock-based compensation expense, and (vi)
depreciation and amortization. Beginning in the fourth quarter of
2021, Evolus began excluding product cost of sales from its
presentation of non-GAAP operating expenses; prior period amounts
have been revised to conform to the current presentation.
Management believes that adjusted gross profit margin is an
important measure for investors because management uses adjusted
gross profit margin as a key performance indicator to evaluate the
profitability of sales without giving effect to costs that are not
core to our cost of sales, such as the settlement payment from
Daewoong, and the amortization of an intangible asset. Management
believes that non-GAAP operating expenses and non-GAAP loss from
operations are useful in helping to identify the company’s core
operating performance and enables management to consistently
analyze the period-to-period financial performance of the core
business operations. Management also believes that non-GAAP
operating expenses and non-GAAP loss from operations will enable
investors to assess the company in the same way that management has
historically assessed the company’s operating expenses against
comparable companies with conventional accounting methodologies.
The company’s definitions of adjusted gross profit, adjusted gross
profit margin, non-GAAP operating expenses and non-GAAP loss from
operations have limitations as analytical tools and may differ from
other companies reporting similarly named measures. Non-GAAP
measures should not be considered measures of financial performance
under GAAP, and the items excluded from such non-GAAP measures
should not be considered in isolation or as alternatives to
financial statement data presented in the financial statements as
an indicator of financial performance or liquidity. Non-GAAP
measures should be considered in addition to results prepared in
accordance with GAAP but should not be considered a substitute for
or superior to GAAP results.
For a reconciliation of our historical adjusted gross profit
margin, non-GAAP operating expenses and non-GAAP loss from
operations presented herein to gross profit margin, GAAP operating
expenses and GAAP loss from operations, the most directly
comparable GAAP financial measures, please see “Reconciliation of
Gross Profit Margin to Adjusted Gross Profit Margin,”
“Reconciliation of GAAP Operating Expenses to Non-GAAP Operating
Expenses” and “Reconciliation of GAAP (Loss) from Operations to
Non-GAAP (Loss) from Operations” in the financial schedules below.
In addition, this press release includes information regarding the
company’s expected adjusted gross profit margin and non-GAAP
operating expenses for full year 2022. Evolus has not provided a
reconciliation of such forward-looking non-GAAP adjusted gross
profit margin or non-GAAP operating expenses because a
reconciliation of such measures to GAAP gross profit margin and
GAAP operating expenses, respectively, the most directly comparable
GAAP financial measures, is not available without unreasonable
efforts. This is due to the inherent difficulty of forecasting the
timing or amount of various reconciling items that would impact the
forward-looking adjusted gross profit margin and non-GAAP operating
expenses outlook that have not yet occurred and/or cannot be
reasonably predicted. Such unavailable information could have a
significant impact on Evolus’ GAAP financial results.
Jeuveau® and Nuceiva® are registered trademarks of Evolus, Inc.
Hi-Pure™ is a trademark of Daewoong Pharmaceutical Co, Ltd.
1
Represents cumulative statistics from the
launch of Jeuveau® in May 2019 through September 30, 2022.
Evolus, Inc. Consolidated
Statements of Operations and Comprehensive Loss (Unaudited, in
thousands, except loss per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenue:
Product revenue, net
$
33,215
$
26,677
$
103,604
$
64,314
Service revenue
684
—
1,366
702
Total net revenues
33,899
26,677
104,970
65,016
Operating expenses:
Product cost of sales (excludes
amortization of intangible assets)
13,490
11,490
42,517
27,700
Settlement payment from
Daewoong
—
—
—
(25,500
)
Selling, general and
administrative
34,794
31,673
105,111
78,801
Research and development
1,376
301
3,394
1,641
In-process research and
development
—
—
2,000
—
Revaluation of contingent
royalty obligation payable to Evolus Founders
1,216
1,400
3,946
4,049
Depreciation and
amortization
920
923
2,695
4,702
Total operating expenses
51,796
45,787
159,663
91,393
Loss from operations
(17,897
)
(19,110
)
(54,693
)
(26,377
)
Other income (expense):
Interest income
38
—
42
1
Interest expense
(2,343
)
(311
)
(6,466
)
(1,256
)
Loss from extinguishment of
debts, net
—
—
—
(968
)
Other expense, net
(62
)
—
(93
)
—
Loss before income taxes:
(20,264
)
(19,421
)
(61,210
)
(28,600
)
Income tax expense
12
12
38
33
Net loss
$
(20,276
)
$
(19,433
)
$
(61,248
)
$
(28,633
)
Other comprehensive gain (loss):
Unrealized loss, net of tax
(203
)
—
(368
)
—
Comprehensive loss
$
(20,479
)
$
(19,433
)
$
(61,616
)
$
(28,633
)
Net loss per share, basic and diluted
$
(0.36
)
$
(0.35
)
$
(1.09
)
$
(0.60
)
Weighted-average shares outstanding used
to compute basic and diluted net loss per share
56,177
55,007
55,998
47,818
Evolus, Inc. Summary of
Consolidated Balance Sheet Data (Unaudited, in thousands)
September 30, 2022
December 31, 2021
Cash and cash equivalents
$
65,572
$
146,256
Accounts receivable, net
20,920
14,657
Inventories
21,565
1,762
Prepaid expenses and other current
assets
7,889
16,124
Total current assets
115,946
178,799
Noncurrent assets
76,773
78,684
Total assets
$
192,719
$
257,483
Accounts payable and accrued expenses
$
38,447
$
36,084
Accrued litigation settlement
5,000
15,000
Other current liabilities
7,824
6,579
Total current
liabilities
51,271
57,663
Accrued litigation settlement
—
5,000
Term loan, net of discount and issuance
costs
71,712
71,222
Other noncurrent liabilities
40,516
41,722
Total liabilities
$
163,499
$
175,607
Total stockholders’
equity
$
29,220
$
81,876
Evolus, Inc. Summary of
Consolidated Cash Flows (Unaudited, in thousands)
Nine Months Ended September
30,
2022
2021
Net cash (used in) provided by:
Operating activities
$
(76,138
)
*
$
(24,344
)
*
Investing activities
(1,548
)
4,420
Financing activities
(2,630
)
25,158
Effect of exchange rates on cash
(368
)
—
Change in cash and cash equivalents
(80,684
)
5,234
Cash and cash equivalents, beginning of
period
146,256
102,562
Cash and cash equivalents, end of
period
$
65,572
$
107,796
*
includes a settlement payment of $15.0
million to Allergan/Medytox
Evolus, Inc. Reconciliation of
Gross Profit Margin to Adjusted Gross Profit Margin (Unaudited, in
thousands)
Three Months Ended September
30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Total net revenues
$
33,899
$
26,677
$
104,970
$
65,016
Cost of sales:
Product cost of sales (excludes
amortization of intangible assets)
13,490
11,490
42,517
27,700
Settlement payment from
Daewoong
—
—
—
(25,500
)
Amortization of distribution
right intangible asset
739
739
2,216
2,200
Total cost of sales
14,229
12,229
44,733
4,400
Gross profit
19,670
14,448
60,237
60,616
Gross profit margin
58.0
%
54.2
%
57.4
%
93.2
%
Add: Settlement payment from
Daewoong
—
—
—
(25,500
)
Add: Amortization of
distribution right intangible asset
739
739
2,216
2,200
Adjusted gross profit
$
20,409
$
15,187
$
62,453
$
37,316
Adjusted gross profit margin
60.2
%
56.9
%
59.5
%
57.4
%
Evolus, Inc. Reconciliation of
GAAP Operating Expenses to Non-GAAP Operating Expenses (Unaudited,
in thousands)
Three Months Ended September
30,
Nine Months Ended
September 30,
Three Months Ended June
30,
2022
2021
2022
2021
2022
GAAP operating expense
$
51,796
$
45,787
$
159,663
$
91,393
$
58,511
Adjustments:
Product cost of sales (excludes
amortization of intangible assets)
13,490
11,490
42,517
27,700
15,819
Settlement payment from
Daewoong
—
—
—
(25,500
)
—
In-process research and
development
—
—
2,000
—
2,000
Revaluation of contingent
royalty obligation
1,216
1,400
3,946
4,049
1,414
Stock-based compensation:
Included in selling, general
and administrative
2,398
2,399
8,236
6,784
2,924
Included in research and
development
85
77
185
143
55
Depreciation and
amortization
920
923
2,695
4,702
853
Non-GAAP operating expense
$
33,687
$
29,498
$
100,084
$
73,515
$
35,446
Evolus, Inc. Reconciliation of
GAAP (Loss) from Operations to Non-GAAP (Loss) from Operations
(Unaudited, in thousands)
Three Months Ended September
30,
Nine Months Ended
September 30,
Three Months Ended June
30,
2022
2021
2022
2021
2022
GAAP (loss) from operations
$
(17,897
)
$
(19,110
)
$
(54,693
)
$
(26,377
)
$
(21,348
)
Adjustments:
Settlement payment from
Daewoong
—
—
—
(25,500
)
—
Revaluation of contingent
royalty obligation
1,216
1,400
3,946
4,049
1,414
In-process research and
development
—
—
2,000
—
2,000
Stock-based compensation:
Included in selling, general
and administrative
2,398
2,399
8,236
6,784
2,924
Included in research and
development
85
77
185
143
55
Depreciation and
amortization
920
923
2,695
4,702
853
Non-GAAP (loss) from operations
$
(13,278
)
$
(14,311
)
$
(37,631
)
$
(36,199
)
$
(14,102
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108006039/en/
Investor/Media Contact: David K.
Erickson, Evolus, Inc. Vice President, Investor Relations Tel:
949-966-1798 Email: david.erickson@evolus.com
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