CHF Solutions, Inc. Announces Third Quarter Financial Results and Provides Company Update

Eden Prairie, Minnesota, UNITED STATES


EDEN PRAIRIE, Minn., Nov. 05, 2019 (GLOBE NEWSWIRE) -- CHF Solutions, Inc. (Nasdaq: CHFS), a medical device company focused on developing, manufacturing and commercializing a clinically proven solution for diuretic-resistant patients suffering from fluid overload, announced today its results for the third quarter ended September 30, 2019, which included the following highlights:

  • Submitted 510(k) application for pediatric label modification on September 30, 2019. Expect regulatory clearance early Q1 2020.
  • Announced publication of a multi-center, retrospective clinical study titled “Kidney Support in Children Using an Ultrafiltration Device” in the Clinical Journal of the American Society of Nephrology, highlighting the use of Aquadex FlexFlow® system in pediatric patients, showing positive survival outcomes across all pediatric populations.
  • Hosted an investor call with principal investigators of pediatric study, Stuart Goldstein, MD (Cincinnati Children’s Hospital Center), David Askenazi, MD (Children’s of Alabama), and Shina Menon, MD (Seattle Children’s Hospital).
  • Announced that Abington Hospital of the Jefferson Health System has initiated a retrospective 344 patient study to evaluate the use of Aquadex FlexFlow in fluid overloaded patients.
  • Opened 4 new accounts in large hospital systems in Texas and Tennessee, and 2 pediatric accounts in Pennsylvania and Delaware. In Q4 expect to continue to open new hospital systems in Ohio, Georgia, Tennessee, and New York, and 5 pediatric accounts.
  • Announced sales force realignment to increase focus on cardiac surgery and eventually pediatrics. Revenue for third quarter ended September 30, 2019 was $1.3 million, a decrease of 8 percent from Q3 2018. Gross margin percentages increased to 57 percent from 33 percent for the same period a year ago.
  • Ended the quarter with $3.6 million in cash and no debt. Subsequent to quarter end, announced financing transactions totaling approximately $1.7 million in net proceeds, for total pro forma cash balance of approximately $5.3 million.

“We continue to execute on our strategy of finding new clinical applications for our therapy including new applications in critical care and eventually pediatrics,” said John Erb, chairman and CEO of CHF Solutions. “We will continue to develop and refine our strategic focus toward driving revenue, which is the key metric our employees, shareholders and potential investors use to measure performance.”

FINANCIALS

CHF SOLUTIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss
 (Unaudited and in thousands, except per share amounts)

 

 
 Three months ended
September 30,
Nine months ended
September 30,
  2019   2018
    2019
  2018  
Net sales$1,252 $1,363 $4,144 $3,499 
Costs and expenses:            
  Cost of goods sold 540  915  1,987  2,686 
  Selling, general and administrative 4,107  3,713  12,098  11,489 
  Research and development 1,112  985  3,719    2,107 
  Total costs and expenses 5,759  5,613  17,804  16,282 
  Loss from operations (4,507) (4,250) (13,660) (12,783)
  Other income (loss), net (1) 10  (1) 10 
  Loss before income taxes (4,508) (4,240) (13,661) (12,773)
  Income tax expense (1) (1) (5) (3)
Net loss$(4,509)$(4,241)$(13,666)$(12,776)
             
Basic and diluted loss per share$(1.70)$(8.50)$(9.49)$(34.59)
             
Weighted average shares outstanding – basic and diluted 2,646  499  1,915  369 
             
Other comprehensive loss:            
  Foreign currency translation adjustments$1 $(1)$(4)$(2)
Total comprehensive loss$(4,508)$(4,242)$(13,670)$(12,778)


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and share amounts)

  September 30,
2019
  December 31,
2018
 
ASSETS (unaudited)    
Current assets      
  Cash and cash equivalents  $3,634 $5,480 
  Accounts receivable 528  786 
  Inventory 1,612  1,658 
  Other current assets 277  203 
Total current assets 6,051  8,127 
  Property, plant and equipment, net 1,025  536 
  Operating lease right-of-use asset, net 487   
  Other assets 21  113 
TOTAL ASSETS$7,584 $8,776 
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities      
  Accounts payable$1,427 $1,133 
  Accrued compensation 1,242  1,498 
  Current portion of operating lease liability 181   
  Other current liabilities 87  209 
Total current liabilities 2,937  2,840 
  Operating lease liability 309   
Total liabilities 3,246  2,840 
       
Commitments and contingencies   —    — 
       
Stockholders’ equity      
Series A junior participating preferred stock as of September 30, 2019 and December 31, 2018, par value $0.0001 per share; authorized 30,000 shares, none outstanding   —    — 
Series F convertible preferred stock as of September 30, 2019 and December 31, 2018, par value $0.0001 per share; authorized 535 and 535 shares, respectively, issued and outstanding 535 and 535, respectively   —    — 
Series G convertible preferred stock as of September 30, 2019 and December 31, 2018, par value $0.0001 per share; authorized 0 and 0 shares, respectively, issued and outstanding 0 and 0, respectively      
Preferred stock as of September 30, 2019 and December 31, 2018, par value
$0.0001 per share; authorized 39,969,465 and 39,969,465 shares, respectively, none outstanding
   —    — 
Common stock as of September 30, 2019 and December 31, 2018, par value
$0.0001 per share; authorized 100,000,000 shares, issued and outstanding
2,879,162 and 513,445, respectively
   —    — 
Additional paid‑in capital 216,173  204,101 
Accumulated other comprehensive income:      
  Foreign currency translation adjustment 1,219  1,223 
Accumulated deficit (213,054) (199,388)
Total stockholders’ equity 4,338  5,936 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$7,584 $8,776 


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, In thousands, except share amounts)

  Outstanding
Shares of Common Stock
 Common
Stock
 Additional
Paid in
Capital
 Accumulated
Other

Comprehensive
Income
 Accumulated
Deficit
 Stockholders’
Equity
 
Balance December 31, 2017 271,357 $ $197,367 $1,227 $(182,356)$16,238 
Net loss     (4,354)(4,354)
Foreign currency translation adjustment    1  1 
Stock-based compensation, net 3  501   501 
Conversion of preferred stock into common stock 32,365      
Balance March 31, 2018 303,725 $ $197,868 $1,228 $(186,710)$12,386 
Net loss          (4,181) (4,181)
Foreign currency translation adjustment        (2)   (2)
Stock-based compensation and stock awards, net  3    606      606 
Conversion of preferred stock into common stock 18,127           
Balance June 30, 2018 321,855 $ $198,474 $1,226 $(190,891)$8,809 
Net loss         (4,241) (4,241)
Foreign currency translation adjustment       (1)   (1)
Stock-based compensation and stock awards, net 3    437      437 
Issuance of common stock, net 181,941    4,649      4,649 
Conversion of preferred stock into common stock 1,516           
Balance September 30, 2018 505,315 $ $203,560 $1,225 $(195,132)$9,653 
                   
  Outstanding
Shares of Common Stock
 Common
Stock
 Additional
Paid in
Capital
 Accumulated
Other

Comprehensive
Income
 Accumulated
Deficit
 Stockholders’
Equity
 
Balance December 31, 2018 513,445 $ $204,101 $1,223 $(199,388)$5,936 
Net loss      (4,727)(4,727)
Foreign currency translation adjustment     (2) (2)
Stock-based compensation, net  3  362   362 
Issuance of common and preferred stock, net  455,178  10,959   10,959 
Conversion of preferred stock into common stock 1,100,394      
Balance March 31, 2019 2,069,020 $ $215,422 $1,221 $(204,115)$12,528 
Net loss      (4,430)(4,430)
Foreign currency translation adjustment     (3) (3)
Stock-based compensation, net    339   339 
Conversion of preferred stock into common stock 259,300      
Balance June 30, 2019 2,328,320 $ $215,761 $1,218 $(208,545)$8,434 
Net loss          (4,509) (4,509)
Foreign currency translation adjustment       1    1 
Stock-based compensation, net      412      412 
Conversion of preferred stock into common stock 550,842           
Balance September 30, 2019 2,879,162 $ $216,173 $1,219 $(213,054)$4,338 


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited and in thousands)

  Nine months ended
September 30,
  2019

 
 2018 
Operating Activities:   

 
   
Net loss$(13,666)$(12,776)
Adjustments to reconcile net loss to cash flows used in operating activities:      
  Depreciation and amortization 179  174 
  Stock-based compensation expense, net 1,113  1,544 
Changes in operating assets and liabilities:      
  Accounts receivable 258  (242)
  Inventory (158) (360)
  Other current assets (74) (104)
  Other assets and liabilities (27)  
  Accounts payable and accrued expenses 38  (79)
Net cash used in operating activities (12,337) (11,843)
       
Investing Activities:      
  Purchases of property, plant and equipment (464) (177)
Net cash used in investing activities (464) (177)
       
Financing Activities:      
  Net proceeds from public stock offering, net 10,959  4,649 
Net cash provided by financing activities 10,959  4,649 
       
Effect of exchange rate changes on cash (4) (2)
Net decrease in cash and cash equivalents (1,846) (7,373)
Cash and cash equivalents - beginning of period 5,480  15,595 
Cash and cash equivalents - end of period$3,634 $8,222 
       
Supplemental schedule of non-cash activities:      
  Inventory transferred to property, plant and equipment$204  $ 

The Company will host a conference call and webcast at 9:00 AM ET today to discuss its financial results and provide an update on the Company’s performance.

To access the live webcast, please visit the Investors page of the CHF Solutions website at http://ir.chf-solutions.com or access the webcast directly at http://ir.chf-solutions.com/events.  Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID: 5258206. An audio archive of the webcast will be available following the call on the Investor page at http://ir.chf-solutions.com/events.

About CHF Solutions
CHF Solutions, Inc. (Nasdaq:CHFS) is a medical device company dedicated to changing the lives of patients suffering from fluid overload through science, collaboration, and innovative technology. The company is focused on developing, manufacturing, and commercializing the Aquadex FlexFlow system for ultrafiltration therapy. CHF Solutions is a Delaware corporation headquartered in Minneapolis, Minnesota with wholly owned subsidiaries in Australia and Ireland. The company has been listed on the Nasdaq Capital Market since February 2012.

About Aquadex FlexFlow® System
The Aquadex FlexFlow system is a clinically proven therapy that provides a safe, effective, and predictable method of removing excess fluid from patients suffering from fluid overload. The Aquadex FlexFlow system is indicated for temporary (up to eight hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy, and for extended (longer than 8 hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy and require hospitalization. The company has submitted an application to the FDA requesting for 510(k) clearance of the Aquadex FlexFlow system to include pediatric patients who weigh 20kg or more. All treatments must be administered by a healthcare provider, under physician prescription, both of whom having received training in extracorporeal therapies.

Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding the Company’s ability to grow revenue and add new accounts in future quarters and the timing of the regulatory clearance for an expanded label in pediatrics. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including, without limitation, those risk associated with our ability to execute on our commercialization strategy, the possibility that we may be unable to raise sufficient funds necessary for our anticipated operations, our post-market clinical data collection activities, benefits of our products to patients, our expectations with respect to product development and commercialization efforts, our ability to increase market and physician acceptance of our products, potentially competitive product offerings, intellectual property protection, our ability to integrate acquired businesses, our expectations regarding anticipated synergies with and benefits from acquired businesses, and other risks and uncertainties described in our filings with the SEC. Forward-looking statements speak only as of the date when made. CHF Solutions does not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


        

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