ConforMIS, Inc. (NASDAQ:CFMS), a medical technology company that
uses its proprietary iFit Image-to-Implant technology platform to
develop, manufacture and sell joint replacement implants that are
customized to fit each patient's unique anatomy, announced today
financial results for the fourth quarter and the year ended
December 31, 2016.
Q4 Summary:
- Total revenue of $21.7 million, up 14% year-over-year on a
reported and constant currency basis
- Product revenue of $21.4 million, up 14% year-over-year on a
reported and constant currency basis-- U.S. product revenue
increased 21% year-over-year-- Rest of World product revenue
decreased 11% year-over-year on a reported basis and decreased 8%
year-over-year on a constant currency basis
- On January 6, 2017, the Company secured up to $50 million in
debt financing from Oxford Finance LLC
"We reported solid revenue and gross margin results in the
fourth quarter of 2016,” said Mark Augusti, President and Chief
Executive Officer of ConforMIS, Inc. “Full-year 2016 product
revenue increased 26 percent year-over-year on a reported basis and
27 percent year-over-year on a constant currency basis, at the
higher-end of our guidance range.”
|
|
Three months ended December 31, |
|
Increase/decrease |
($, in
thousands) |
|
2016 |
|
2015 |
|
$ Change |
|
% Change |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
(as reported) |
|
(constant currency) |
United
States |
|
$ |
17,703 |
|
$ |
14,627 |
|
$ |
3,076 |
|
|
21 |
% |
|
21 |
% |
Rest of
world |
|
|
3,732 |
|
|
4,211 |
|
|
(479 |
) |
|
-11 |
% |
|
-8 |
% |
Product
revenue |
|
|
21,435 |
|
|
18,838 |
|
|
2,597 |
|
|
14 |
% |
|
14 |
% |
Royalty
revenue |
|
|
238 |
|
|
233 |
|
|
5 |
|
|
2 |
% |
|
2 |
% |
Total
revenue |
|
$ |
21,673 |
|
$ |
19,071 |
|
$ |
2,602 |
|
|
14 |
% |
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2016 Financial Results
Total revenue increased $2.6 million to $21.7 million, or 14%
year-over-year on a reported and constant currency basis. Total
revenue in the fourth quarter of 2016 and 2015 includes royalty
revenue of $0.2 million related to patent license agreements.
Product revenue increased $2.6 million to $21.4 million, or 14%
year-over-year on a reported and constant currency basis. U.S.
product revenue increased $3.1 million to $17.7 million, or 21%
year-over-year, and Rest of World product revenue decreased $0.5
million to $3.7 million, or 11% year-over-year on a reported basis
and decreased 8% on a constant currency basis. Product revenue from
sales of iTotal CR, iDuo and iUni decreased $0.3 million to $16.8
million, or 2% year-over-year on a reported basis and decreased 1%
on a constant currency basis. Product revenue from sales of
iTotal CR, iDuo and iUni was driven by U.S. growth of 3%
year-over-year and Rest of World decline of 16% on a reported basis
and 13% on a constant currency basis. Product revenue from sales of
iTotal PS increased $2.9 million to $4.6 million or 167%
year-over-year on a reported and constant currency basis.
Total gross profit increased $1.7 million to $8.0 million, or
37% of revenue, in the fourth quarter of 2016, compared to $6.3
million, or 33% of revenue, in the fourth quarter of 2015. This
increase in gross profit and gross margin was driven primarily by
higher product revenue in 2016 compared to 2015.
Total operating expenses increased $0.9 million to $22.0
million, or 4% year-over-year. The increase in expenses was driven
primarily by general and administrative expenses compared to the
fourth quarter of 2015.
Net loss was $15.7 million, or $0.37 per basic share, in the
fourth quarter of 2016, compared to a net loss of $15.0 million, or
$0.37 per basic share, for the same period last year. Net loss per
basic share calculations assume weighted-average basic shares
outstanding of 42.1 million for the fourth quarter of fiscal year
2016, compared to 40.8 million in the same period last year.
|
|
Twelve months ended December 31 |
|
Increase/decrease |
($, in
thousands) |
|
2016 |
|
2015 |
|
$ Change |
|
% Change |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
(as reported) |
|
|
(constant currency) |
United
States |
|
$ |
62,366 |
|
$ |
47,223 |
|
$ |
15,143 |
|
|
32 |
% |
|
32 |
% |
Rest of
world |
|
|
16,555 |
|
|
15,568 |
|
|
987 |
|
|
6 |
% |
|
10 |
% |
Product
revenue |
|
|
78,921 |
|
|
62,791 |
|
|
16,130 |
|
|
26 |
% |
|
27 |
% |
Royalty
revenue |
|
|
978 |
|
|
4,096 |
|
|
(3,118 |
) |
|
-76 |
% |
|
-76 |
% |
Total
revenue |
|
$ |
79,899 |
|
$ |
66,887 |
|
$ |
13,012 |
|
|
19 |
% |
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2016 Financial Results
Total revenue for the twelve-month period ended December 31,
2016 increased $13.0 million to $79.9 million, or 19%
year-over-year on a reported basis and 20% on a constant currency
basis. Total revenue included royalty revenue of $1.0 million for
the year ended 2016 and $4.1 million for the year ended 2015
related to patent license agreements. The decrease in royalty
revenue related to lump-sum payments received upon the signing of
patent license agreements in 2015.
Product revenue increased $16.1 million to $78.9 million, or 26%
year-over-year on a reported basis and 27% on a constant currency
basis. U.S. product revenue increased $15.1 million to $62.4
million, or 32% year-over-year, and Rest of World product revenue
increased $1.0 million to $16.6 million, or 6% year-over-year on a
reported basis and 10% on a constant currency basis. Product
revenue from sales of iTotal CR, iDuo and iUni increased $5.0
million to $64.5 million, or 8% year-over-year on a reported basis
and 9% on a constant currency basis. Product revenue from sales of
iTotal PS increased $11.1 million to $14.4 million, or 339%
year-over-year on a reported basis and 341% on a constant currency
basis.
Total gross profit increased $4.9 million to $26.7 million, or
33% of revenue, in 2016 compared to $21.8 million, or 33% of
revenue, in 2015. Total operating expenses increased $5.1 million
to $82.9 million, or 7% year-over-year in 2016.
Net loss was $57.6 million, or $1.39 per basic share, for 2016
compared to a net loss of $57.2 million, or $2.60 per basic share,
for 2015. Net loss per basic share calculations assume
weighted-average basic shares outstanding of 41.5 million for
fiscal year 2016, compared to 22.0 million in the same period last
year.
As of December 31, 2016, the Company’s cash and cash equivalents
and investments totaled $65.5 million, compared to $117.2 million
last year. As previously announced last month, the Company
has secured up to $50 million in term debt financing from Oxford
Finance.
2017 Financial Guidance
For the full year 2017, the Company expects total revenue in a
range of $80 million to $84 million. The Company's 2017
revenue guidance assumes the following:
- Royalty revenue of approximately $0.8 million related to
ongoing patent license royalty payments.
- Product revenue in a range of $79 million to $83 million,
representing year-over-year growth of 0% to 5% on a reported basis
and 1% to 6% on a constant currency basis.
- Impacting 2017 product revenue growth is a change in the
reimbursement of partial knee replacement procedures in
Germany. In December it was announced that the reimbursement
for customized partial knee procedures will be reimbursed at the
same rate as the off-the-shelf partial knee procedures, beginning
January 2017.
- Also impacting our 2017 product revenue growth, when compared
to 2016 revenue, is the incremental sales contribution to 2016
revenue results from rescheduled cases, including reduction in
order lead times, subsequent to the 2015 recall.
For the full year 2017, the Company expects total gross margin
in a range of 36% to 38%.
For the first quarter of 2017, the Company is also providing
one-time quarterly guidance of total revenue in a range of $17.7
million to $18.7 million.
“Our 2017 guidance for constant currency product revenue growth
in the range of 1 percent to 6 percent is not reflective of the
underlying health of our U.S. business which we expect to grow in
the high-single digit to mid-teens percentage this year over last
year,” said Mark Augusti. “Our Rest of World business will be
impacted by recent changes to the partial knee replacement
reimbursement environment in Germany, our largest international
market.
Mark Augusti continued, “2017 will be a transition year for
ConforMIS as we focus on improving our long-term growth and
profitability profile. We expect continued strength coming from our
iTotal PS, which was fully launched in the first half of 2016, and
we are focused on improving our commercial execution to drive
better results in our base business going forward. Importantly, we
expect continued improvements in our gross margin in 2017.”
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.
Conference Call
As previously announced, ConforMIS will conduct a conference
call and webcast today at 4:30 PM Eastern Time. Management will
discuss financial results and strategic matters. To participate in
the conference call, please call 877-809-6331 (or 615-247-0224 for
international) and use conference ID number 55924641 or listen to
the webcast in the investor relations section of the company's
website at ir.conformis.com. 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 that are
individually sized and shaped, or customized, to fit each patient's
unique anatomy. ConforMIS offers a broad line of customized
knee implants and pre-sterilized, single-use instruments delivered
in a single package to the hospital. In clinical studies,
ConforMIS iTotal CR demonstrated superior clinical outcomes,
including better function and greater patient satisfaction,
compared to traditional, off-the-shelf implants. ConforMIS
owns or exclusively in-licenses approximately 450 issued patents
and pending patent applications that cover customized 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
http://ir.conformis.com/.
Cautionary Statement Regarding Forward-Looking
Statements
Any statements in this press release about our future
expectations, plans and prospects, including statements about our
strategy, future operations, future financial position and results,
market growth, total revenue and revenue mix by product and
geography, gross margin, operating trends, the potential impact and
advantages of using customized implants, 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" and similar expressions, constitute
forward-looking statements within the meaning of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995.
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 our estimates regarding
the potential market opportunity for our current and future
products, our 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 public filings with the 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 December 31, |
|
Twelve Months Ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Product |
|
$ 21,435 |
|
$ 18,838 |
|
$ 78,921 |
|
$ 62,791 |
Royalty |
|
238 |
|
233 |
|
978 |
|
4,096 |
Total revenue |
|
21,673 |
|
19,071 |
|
79,899 |
|
66,887 |
Cost of revenue |
|
13,628 |
|
12,731 |
|
53,192 |
|
45,102 |
Gross
profit |
|
8,045 |
|
6,340 |
|
26,707 |
|
21,785 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Sales and
marketing |
|
10,023 |
|
9,974 |
|
41,086 |
|
37,558 |
Research
and development |
|
4,134 |
|
4,779 |
|
16,608 |
|
16,997 |
General
and administrative |
|
7,872 |
|
6,401 |
|
25,157 |
|
23,191 |
Total
operating expenses |
|
22,029 |
|
21,154 |
|
82,851 |
|
77,746 |
Loss from
operations |
|
(13,984) |
|
(14,814) |
|
(56,144) |
|
(55,961) |
|
|
|
|
|
|
|
|
|
Other income and
expenses |
|
|
|
|
|
|
|
|
Interest
income |
|
77 |
|
46 |
|
486 |
|
138 |
Interest
expense |
|
(34) |
|
(5) |
|
(138) |
|
(1,385) |
Loss on
extinguishment of debt |
|
-- |
|
(205) |
|
-- |
|
(205) |
Other
income (expense) |
|
(1,764) |
|
-- |
|
(1,730) |
|
208 |
Total
other expenses |
|
(1,721) |
|
(164) |
|
(1,382) |
|
(1,244) |
Loss before income
taxes |
|
(15,705) |
|
(14,978) |
|
(57,526) |
|
(57,205) |
Income
tax provision |
|
36 |
|
12 |
|
63 |
|
41 |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ (15,741) |
|
$ (14,990) |
|
$ (57,589) |
|
$ (57,246) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share -
basic and diluted |
|
$ (0.37) |
|
$ (0.37) |
|
$ (1.39) |
|
$ (2.60) |
Weighted average common
shares outstanding - basic and diluted |
|
42,081,490 |
|
40,824,571 |
|
41,521,629 |
|
21,993,066 |
|
|
|
|
|
|
|
|
|
CONFORMIS, INC. AND
SUBSIDIARIES |
Consolidated Balance Sheets |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
December 31, 2016 |
|
December 31, 2015 |
Assets |
|
(unaudited) |
|
|
Current
Assets |
|
|
|
|
Cash and
cash equivalents |
|
$ 37,257 |
|
$ 117,185 |
Investments |
|
28,242 |
|
-- |
Accounts
receivable, net |
|
14,675 |
|
14,867 |
Inventories |
|
11,720 |
|
11,520 |
Prepaid
expenses and other current assets |
|
3,954 |
|
2,451 |
Total
current assets |
|
95,848 |
|
146,023 |
Property and equipment,
net |
|
15,084 |
|
10,966 |
Other Assets |
|
|
|
|
Restricted cash |
|
300 |
|
600 |
Intangible assets, net |
|
746 |
|
995 |
Goodwill |
|
753 |
|
753 |
Other
long-term assets |
|
79 |
|
32 |
Total
assets |
|
$
112,810 |
|
$
159,369 |
|
|
|
|
|
Liabilities and
stockholder's equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts
payable |
|
$ 5,474 |
|
$ 4,718 |
Accrued
expenses |
|
8,493 |
|
7,811 |
Deferred
revenue |
|
305 |
|
305 |
Current
portion of long-term debt |
|
-- |
|
295 |
Total
current liabilities |
|
14,272 |
|
13,129 |
Other
long-term liabilities |
|
164 |
|
220 |
Deferred
revenue |
|
4,320 |
|
4,625 |
Long-term
debt |
|
-- |
|
183 |
Total
liabilities |
|
18,755 |
|
18,157 |
Commitments and
contingencies |
|
-- |
|
-- |
Stockholders'
equity |
|
|
|
|
Preferred
stock, $0.00001 par value: |
|
|
|
|
Authorized: 5,000,000 shares authorized at December 31, 2016 and
December 31, 2015, respectively, no shares outstanding as of
December 31, 2016 and December 31, 2015. |
|
-- |
|
-- |
Common
stock, $0.00001 par value: |
|
|
|
|
Authorized: 200,000,000 shares at December 31, 2016 and December
31, 2015; 43,399,547 and 41,110,127 shares issued and outstanding
at December 31, 2016 and December 31, 2015, respectively |
|
-- |
|
-- |
Additional paid-in capital |
|
476,486 |
|
467,075 |
Accumulated deficit |
|
(382,930) |
|
(325,342) |
Accumulated other comprehensive loss |
|
497 |
|
(521) |
Total
stockholders' equity |
|
94,055 |
|
141,212 |
Total
liabilities and stockholders' equity |
|
$
112,810 |
|
$
159,369 |
|
|
|
|
|
CONTACT:
Investor contact
Oksana Bradley
ir@conformis.com
(781) 374-5598
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