Nuvectra™ Reports First Quarter 2017 Financial Results
May 09 2017 - 4:01PM
Nuvectra Corporation (NASDAQ:NVTR), a neurostimulation medical
device company, announced today financial results for the first
quarter ended March 31, 2017.
Highlights
- Record total revenues of $5.0 million, including total Algovita
sales of $3.4 million
- U.S. commercial team building momentum with new and existing
customers
- Remain on track with the Virtis U.S. and European regulatory
approval timelines
Scott Drees, CEO, said, “We continued to
progress on all of our key initiatives during the first quarter.
Total Algovita revenue grew 68% sequentially from the fourth
quarter, demonstrating the ramping productivity of our commercial
team and their ability to secure new accounts while also driving
deeper account penetration. In the first quarter, we also completed
our FDA regulatory submissions for the Virtis Sacral Nerve
Stimulation System. We remain on track to enter the large,
fast-growing, and underserved SNS market in Europe by the end of
the year and in the U.S. in the second half of 2018.”
First Quarter Financial
Results
Total revenue in the first quarter of 2017
was $5.0 million, a 144.4% increase from $2.1 million in the first
quarter of 2016. Gross profit in the first quarter of 2017 was $2.6
million, or 52.2% gross margin, an increase from $1.0 million, or
48.8% gross margin, in the first quarter of 2016.
Operating expenses in the first quarter of
2017 were $15.2 million, an 87.6% increase from $8.1 million in the
first quarter of 2016. The increase reflects investments in the
Company’s sales and marketing team, along with higher headcount and
other costs related to becoming a public company.
Net loss for the first quarter of 2017 was
$(13.1) million or $(1.27) per share, compared with a net loss of
$(7.1) million, or $(0.70) per share, for the first quarter of
2016.
Total cash and cash equivalents were $48.1
million as of March 31, 2017.
Conference Call
Information
Nuvectra will hold a conference call on
Tuesday, May 9, 2017 at 4:30pm ET to discuss the results. The dial
in numbers are (844) 882-7830 for domestic callers and (574)
990-9704 for international callers. The conference ID is
9040428. A live webcast of the conference call will be
available on the investor relations section of the Company’s
website at http://investors.nuvectramed.com/.
A replay of the call will be available
starting on May 9, 2017 through May 16, 2017. To access the replay,
dial (855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 9040428. The webcast
will be available in the investor relations section of the
Company’s website for 90 days following the completion of the
call.
About Nuvectra
Corporation
Nuvectra™ is a neurostimulation company
committed to helping physicians improve the lives of people with
chronic neurological conditions. The Algovita Spinal Cord
Stimulation (SCS) System is our first commercial offering and is CE
marked and FDA approved for the treatment of chronic pain of the
trunk and/or limbs. Our innovative technology platform also has
capabilities under development to support other neurological
indications such as sacral nerve stimulation (SNS), and deep brain
stimulation (DBS). In addition, our NeuroNexus subsidiary designs,
manufactures and markets leading-edge neural-interface technologies
for the neuroscience clinical research market. Visit the Nuvectra
website at www.nuvectramed.com.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains "forward-looking
statements," including statements we make regarding the outlook
for Nuvectra as an independent publicly-traded company.
Forward-looking statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions, and therefore they
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and may be outside of
our control. Our actual performance may differ materially from
those indicated in the forward-looking statements. Therefore, you
should not rely on any of these forward-looking statements. Any
forward-looking statement made by us is based only on information
currently available to us and speaks only as of the date on which
it is made. Important factors that could cause our actual
results to differ materially from those indicated in the
forward-looking statements include: (i) our ability to successfully
commercialize Algovita and to develop, complete and commercialize
enhancements or improvements to Algovita; (ii) our ability to
successfully compete with our current SCS competitors and the
ability of our U.S. sales representatives to successfully establish
market share and acceptance of Algovita, (iii) the uncertainty of
obtaining regulatory approvals in the United States and Europe for
our Virtis SNS system, (iv) our ability to successfully launch and
commercialize the Virtis SNS system if it receives regulatory
approval (v) our ability to demonstrate the features, perceived
benefits and capabilities of Algovita to physicians and patients in
competition with similar products already well established and sold
in the SCS market; (vi) our ability to anticipate and satisfy
customer needs and preferences and to develop, introduce and
commercialize new products or advancements and improvements to
Algovita in order to successfully meet our customers’ expectations;
(vii) the outcome of our development plans for our neurostimulation
technology platform, including our ability to identify additional
indications or conditions for which we may develop neurostimulation
medical devices or therapies and seek regulatory approval thereof;
(viii) our ability to identify business development and growth
opportunities and to successfully execute on our strategy,
including our ability to seek and develop strategic partnerships
with third parties to, among other things, fund clinical and
development costs for new product offerings; (ix) the performance
by our development partners, including Aleva
Neurotherapeutics, S.A., of their obligations under their
agreements with us; (x) the scope of protection for our
intellectual property rights covering Algovita and other products
using our neurostimulation technology platform, along with any
product enhancements or improvements; (xi) our ability to
successfully build, attract and maintain an effective commercial
infrastructure and qualified sales force in the United States;
(xii) our compliance with all regulatory and legal requirements
regarding implantable medical devices and interactions with
healthcare professionals; (xiii) any product recalls, or the
receipt of any warning letters, mandatory corrections or fines from
any governmental or regulatory agency; and (xiv) our ability to
satisfy the conditions and covenants, including trailing six month
revenue milestones, of our Credit Facility. Please see the
section entitled “Risk Factors” in Nuvectra’s Annual Report on Form
10-K and in our other quarterly and periodic filings for a
description of these and other risks and uncertainties. We
undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
Nuvectra Corporation |
CONDENSED CONSOLIDATED BALANCE
SHEETS—Unaudited |
(in thousands except share and per share
data) |
|
|
|
As of |
|
|
|
March 31, 2017 |
|
|
December 30,2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
48,067 |
|
|
$ |
63,710 |
|
Trade
accounts receivable, net of allowance for doubtful accounts of $53
in fiscal 2017 and $10 in fiscal 2016 |
|
|
4,409 |
|
|
|
3,177 |
|
Inventories |
|
|
4,021 |
|
|
|
5,233 |
|
Prepaid
expenses and other current assets |
|
|
205 |
|
|
|
443 |
|
Total
current assets |
|
|
56,702 |
|
|
|
72,563 |
|
Property, plant and
equipment, net |
|
|
6,483 |
|
|
|
6,317 |
|
Intangible assets,
net |
|
|
1,642 |
|
|
|
1,714 |
|
Goodwill |
|
|
38,182 |
|
|
|
38,182 |
|
Other long-term
assets |
|
|
526 |
|
|
|
526 |
|
Total
assets |
|
$ |
103,535 |
|
|
$ |
119,302 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
5,880 |
|
|
$ |
9,928 |
|
Accrued
liabilities |
|
|
4,085 |
|
|
|
3,355 |
|
Other
accrued compensation |
|
|
1,891 |
|
|
|
1,766 |
|
Accrued
bonuses |
|
|
714 |
|
|
|
991 |
|
Total
current liabilities |
|
|
12,570 |
|
|
|
16,040 |
|
Other long-term
liabilities |
|
|
1,118 |
|
|
|
940 |
|
Long-term debt,
net |
|
|
13,865 |
|
|
|
13,744 |
|
Total
liabilities |
|
|
27,553 |
|
|
|
30,724 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 10,342,317
and 10,319,627 shares issued and outstanding in fiscal 2017 and
fiscal 2016, respectively |
|
|
10 |
|
|
|
10 |
|
Additional paid-in capital |
|
|
122,332 |
|
|
|
121,806 |
|
Accumulated other comprehensive loss |
|
|
(2 |
) |
|
|
(2 |
) |
Accumulated deficit |
|
|
(46,358 |
) |
|
|
(33,236 |
) |
Total
stockholders’ equity |
|
|
75,982 |
|
|
|
88,578 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
103,535 |
|
|
$ |
119,302 |
|
Nuvectra Corporation |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
AND COMPREHENSIVE LOSS —
Unaudited |
(in thousands except per share
data) |
|
|
Three Months Ended |
|
|
March 31, 2017 |
|
April 1, 2016 |
|
Sales: |
|
|
|
|
Product |
$ |
4,588 |
|
|
$ |
1,551 |
|
|
Service |
|
452 |
|
|
|
511 |
|
|
Total
sales |
|
5,040 |
|
|
|
2,062 |
|
|
Cost of sales: |
|
|
|
|
Product |
|
2,101 |
|
|
|
801 |
|
|
Service |
|
310 |
|
|
|
254 |
|
|
Total
cost of sales |
|
2,411 |
|
|
|
1,055 |
|
|
Gross
profit |
|
2,629 |
|
|
|
1,007 |
|
|
Operating
expenses: |
|
|
|
|
Selling,
general and administrative expenses |
|
10,805 |
|
|
|
4,085 |
|
|
Research,
development and engineering costs, net |
|
4,373 |
|
|
|
3,536 |
|
|
Other
operating expenses |
|
— |
|
|
|
469 |
|
|
Total
operating expenses |
|
15,178 |
|
|
|
8,090 |
|
|
Operating
loss |
|
(12,549 |
) |
|
|
(7,083 |
) |
|
Interest expense,
net |
|
370 |
|
|
|
59 |
|
|
Other expense, net |
|
203 |
|
|
|
— |
|
|
Loss
before provision for income taxes |
|
(13,122 |
) |
|
|
(7,142 |
) |
|
Provision for income
taxes |
|
— |
|
|
|
— |
|
|
Net
loss |
$ |
(13,122 |
) |
|
$ |
(7,142 |
) |
|
|
|
|
|
|
Other comprehensive
loss: |
|
|
|
|
Unrealized holding loss on investments arising during
period |
|
— |
|
|
|
— |
|
|
Other comprehensive
loss |
|
— |
|
|
|
— |
|
|
Comprehensive loss |
$ |
(13,122 |
) |
|
$ |
(7,142 |
) |
|
|
|
|
|
|
Basic and diluted net
loss per share |
$ |
(1.27 |
) |
|
$ |
(0.70 |
) |
|
Basic and diluted
weighted average shares outstanding |
|
10,335 |
|
|
|
10,258 |
|
|
Company Contacts:
Nuvectra Corporation
Walter Berger, Chief Operating Officer and Chief Financial Officer
(214) 474-3102
wberger@nuvectramed.com
Jennifer Armstrong, Media Relations
(214) 474-3110
jarmstrong@nuvectramed.com
Investor Contacts:
The Ruth Group
Nick Laudico
(646) 536-7030
nlaudico@theruthgroup.com
Zack Kubow
(646) 536-7020
zkubow@theruthgroup.com
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