CHF Solutions, Inc. Announces Third Quarter Financial Results and Provides Company Update
November 05 2019 - 8:00AM
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 endedSeptember
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
SUBSIDIARIESCondensed 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 outstanding2,879,162 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
SUBSIDIARIESCondensed 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
SUBSIDIARIESCondensed Consolidated Statements of
Cash Flows(Unaudited and in thousands)
|
|
Nine months endedSeptember
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 SolutionsCHF 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 StatementsCertain 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.
CONTACTS:
INVESTORS:
Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
952-345-4205
ir@chf-solutions.com
-or-
Bret Shapiro
Managing Partner
CORE IR
516-222-2560
brets@coreir.com
www.coreir.com
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