BILLERICA, Mass., Nov. 03, 2021 (GLOBE NEWSWIRE) -- Conformis, Inc. (NASDAQ:CFMS), an orthopedic medical device company that features personalized knee and hip replacement products, announced today financial results for the third quarter ended September 30, 2021.
Third Quarter 2021 Summary
- Total revenue of $14.3 million, a decrease of 12% year-over-year on a reported and constant currency basis.
- Product revenue of $14.1 million, a decrease of 12% year-over-year on a reported and constant currency basis.
- Conformis hip system revenue down 16% year-over-year to $0.7 million.
- First procedures successfully completed using Identity Imprint™ knee replacement system.
- First procedures successfully completed under the Stryker1 partnership program for the Triathlon knee utilizing patient-specific instrumentation.
- Cash and cash equivalents of $97.1 million as of September 30, 2021.
Executive Commentary – Mark Augusti, President and CEO
“I am pleased with the progress we made on our growth strategy over the last three months. As COVID-19’s Delta variant became more pronounced during the quarter, the impact on elective procedures and our business was greater than expected. This resulted in a number of deferred procedures, many of which have already been rescheduled. The disruption caused by the Delta variant has had minimal affect on the limited market releases of our new Identity Imprint knee offering and our manufacturing partnership with Stryker. Both are progressing and we are positioned to capitalize on the shift in procedures to the ASC in 2022 and beyond.”
| Three months ended September 30, | Increase/(decrease) | |||||||||||||||
| ($, in thousands) | 2021 | 2020 | $ Change | % Change | % Change | |||||||||||
| (as reported) | (constant currency) | |||||||||||||||
| United States | $ | 12,405 | $ | 14,139 | $ | (1,734 | ) | (12 | ) | % | (12 | ) | % | |||
| Rest of world | 1,725 | 1,836 | (111 | ) | (6 | ) | % | (10 | ) | % | ||||||
| Product revenue | 14,130 | 15,975 | (1,845 | ) | (12 | ) | % | (12 | ) | % | ||||||
| Royalty revenue | 123 | 146 | (23 | ) | (16 | ) | % | (16 | ) | % | ||||||
| Total revenue | $ | 14,253 | $ | 16,121 | $ | (1,868 | ) | (12 | ) | % | (12 | ) | % | |||
Third Quarter 2021 Highlights
Revenue
- Decrease in revenue year-over-year was primarily due to deferred and rescheduled elective surgeries as a result of the increase in COVID-19 cases associated with the Delta variant.
- Product revenue compared to the third quarter of 2020 was down 12%.
Gross Margin
- Total gross profit decreased $1.7 million to $6.0 million, or 42% of revenue, in the third quarter of 2021, compared to $7.7 million, or 48% of revenue, in the third quarter of 2020.
- The 540 basis-point decrease in gross margin year-over-year was driven primarily by lower volume, increased material, labor, and other manufacturing costs, higher cancelled case inventory expense, and a reduction in product selling price.
Operating Expenses
- Total operating expenses of $17.4 million, an increase of 18% year-over-year.
- Sales and marketing expenses increased $0.7 million primarily due to higher tradeshow, surgeon training, and travel expenses, which were partially offset by lower commission expenses.
- Research and development expenses increased $0.7 million primarily driven by personnel and project-related costs to support our new product pipeline.
- General and administrative expenses increased $1.3 million primarily driven by higher planned professional fees related to the ongoing protection of our intellectual property.
Net Loss
- Net loss was $13.0 million, or $0.07 per basic and diluted share, in the third quarter of 2021, compared to a net loss of $6.2 million, or $0.09 per basic and diluted share, in the same period last year.
- Foreign currency exchange transaction loss was $1.0 million in the third quarter of 2021, compared to foreign currency exchange transaction income of $1.5 million in the same period last year.
- Weighted average basic and diluted shares outstanding of 178.5 million for the third quarter of 2021, compared to 71.2 million for the same period last year.
Capital Structure and Liquidity
- Cash and cash equivalents totaled $97.1 million as of September 30, 2021, compared to $28.7 million as of December 31, 2020.
Outlook
- We expect our fourth quarter product revenue to improve sequentially from the third quarter and to be in the range of $15.0 million to $17.0 million.
- The wider-than-usual range we are providing is due to the unpredictable recovery from the Delta variant and its potential impact on our existing scheduled fourth quarter surgeries.
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/wvne4ujy.
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 and conform to each patient's unique anatomy. Conformis also offers Identity Imprint™, a new line of total knee replacement products that utilizes a proprietary algorithm to select the implant size that most closely meets the geometric and anatomic requirements of the patient’s knee. Conformis’ sterile, just-in-time, Surgery-in-a-Box™ delivery system is available with all of its implants and personalized, single-use instruments. 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 Delta variant, 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, Quarterly Reports on Form 10-Q for each of the fiscal quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, respectively, 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.
1 Stryker and Triathlon are registered trademarks of Stryker Corporation or affiliated entities in the United States and other countries.
| CONFORMIS, INC. AND SUBSIDIARIES | |||||||||
| Consolidated Statements of Operations | |||||||||
| (unaudited) | |||||||||
| (in thousands, except share and per share data) | |||||||||
| Three Months Ended September 30, | |||||||||
| 2021 | 2020 | ||||||||
| Revenue | |||||||||
| Product | $ | 14,130 | $ | 15,975 | |||||
| Royalty and licensing | 123 | 146 | |||||||
| Total revenue | 14,253 | 16,121 | |||||||
| Cost of revenue | 8,231 | 8,437 | |||||||
| Gross profit | 6,022 | 7,684 | |||||||
| Operating expenses | |||||||||
| Sales and marketing | 6,434 | 5,755 | |||||||
| Research and development | 3,548 | 2,866 | |||||||
| General and administrative | 7,407 | 6,134 | |||||||
| Total operating expenses | 17,389 | 14,755 | |||||||
| Loss from operations | (11,367 | ) | (7,071 | ) | |||||
| Other income and expenses | |||||||||
| Interest income | 20 | 8 | |||||||
| Interest expense | (601 | ) | (611 | ) | |||||
| Foreign currency exchange transaction (loss) income | (996 | ) | 1,511 | ||||||
| Total other (expenses) income | (1,577 | ) | 908 | ||||||
| Loss before income taxes | (12,944 | ) | (6,163 | ) | |||||
| Income tax provision | 29 | 20 | |||||||
| Net loss | $ | (12,973 | ) | $ | (6,183 | ) | |||
| Net loss per share: | |||||||||
| Basic and diluted | $ | (0.07 | ) | $ | (0.09 | ) | |||
| Weighted average common shares outstanding: | |||||||||
| Basic and diluted | 178,452,296 | 71,224,786 | |||||||
| CONFORMIS, INC. AND SUBSIDIARIES | |||||||||
| Consolidated Balance Sheets | |||||||||
| (in thousands, except share and per share data) | |||||||||
| September 30, 2021 | December 31, 2020 | ||||||||
| Assets | (unaudited) | ||||||||
| Current Assets | |||||||||
| Cash and cash equivalents | $ | 97,111 | $ | 28,673 | |||||
| Accounts receivable, net | 8,943 | 8,515 | |||||||
| Royalty and licensing receivable | 15,634 | 1,256 | |||||||
| Inventories, net | 14,478 | 12,585 | |||||||
| Prepaid expenses and other current assets | 1,787 | 2,315 | |||||||
| Total current assets | 137,953 | 53,344 | |||||||
| Property and equipment, net | 10,914 | 12,240 | |||||||
| Operating lease right-of-use assets | 7,906 | 5,215 | |||||||
| Other Assets | |||||||||
| Restricted cash | 562 | 462 | |||||||
| Other long-term assets | 211 | 239 | |||||||
| Total assets | $ | 157,546 | $ | 71,500 | |||||
| Liabilities and stockholder's equity | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 5,110 | $ | 4,918 | |||||
| Accrued expenses | 8,309 | 7,213 | |||||||
| Operating lease liabilities | 1,809 | 1,620 | |||||||
| Advance on research and development | — | 3,168 | |||||||
| Contract liability | — | 14,000 | |||||||
| Total current liabilities | 15,228 | 30,919 | |||||||
| Long-term debt, less debt issuance costs | 20,799 | 25,003 | |||||||
| Operating lease liabilities | 6,817 | 4,206 | |||||||
| Total liabilities | 42,844 | 60,128 | |||||||
| Commitments and contingencies | |||||||||
| Stockholders' equity | |||||||||
| Preferred stock, $0.00001 par value: | |||||||||
| Authorized: 5,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding as of September 30, 2021 and December 31, 2020 | — | — | |||||||
| Common stock, $0.00001 par value: | |||||||||
| Authorized: 300,000,000 shares authorized at September 30, 2021 and December 31, 2020; 185,879,973 and 95,546,577 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 2 | 1 | |||||||
| Additional paid-in capital | 631,475 | 543,809 | |||||||
| Accumulated deficit | (514,875 | ) | (528,438 | ) | |||||
| Accumulated other comprehensive loss | (1,900 | ) | (4,000 | ) | |||||
| Total stockholders' equity | 114,702 | 11,372 | |||||||
| Total liabilities and stockholders' equity | $ | 157,546 | $ | 71,500 | |||||
