Completed FDA Facility Inspection
Sientra, Inc. (NASDAQ:SIEN) (“Sientra” or the “Company”), a medical
aesthetics company, today announced its financial results for the
third quarter ended September 30, 2017.
Jeffrey M. Nugent, Chairman and Chief Executive
Officer of Sientra, said, “We continue to advance on each of our
strategic initiatives, highlighted by the completion of the FDA
inspection of our U.S. manufacturing facility in late
October. We are finalizing all remaining documentation to
submit to the FDA that would enable us to still get approval by the
end of this year per statutory review windows. However, given the
unanticipated delay in the commencement of the site inspection, we
could see the approval slip into the first quarter of 2018.
Based on our confidence of receiving approval, we also began
manufacturing commercial ready finished goods at our facility in
early October in anticipation of FDA approval and we will continue
building inventory of our highest demand products in parallel with
the FDA review process.”
Mr. Nugent continued, “During the quarter, in
addition to continued growth in our Breast Products segment, we
also made good progress with the integration, re-positioning, and
optimization of the miraDry® business. This includes
initiating the process of enhancing the miraDry treatment protocol
to make it faster and easier for a broader group of physicians and
patients, along with completing the build out of our sales
leadership team, which will allow us to continue expanding both our
capital and consumable sales force. In all, we remain well
positioned to rapidly grow our miraDry business as we move into
2018 and re-launch our entire breast implant line.”
Third Quarter 2017 Financial
ReviewBeginning this quarter, the Company will be
reporting results in two segments, Breast Products and miraDry. The
Breast Products segment will include the Company’s breast implant
portfolio, tissue expander portfolio, and scar management products.
The miraDry segment will include the miraDry business, the
acquisition of which was completed on July 25, 2017. The
Company is now consolidating financials from the miraDry
segment.
Total net sales for the third quarter 2017 were
$9.8 million, compared to total net sales of $6.5 million for the
same period in 2016. On a Pro Forma basis, assuming the
Miramar Labs acquisition was completed on July 1, 2017, total net
sales were $10.7 million for the third quarter 2017.
Net sales for the Breast Products segment
totaled $7.7 million in the third quarter 2017, a 17% increase
compared to $6.5 million for third quarter 2016, driven by the
Company’s acquisition of the Specialty Surgical Products tissue
expander portfolio, completed in the fourth quarter of 2016.
Net sales for the miraDry segment in the third quarter of
2017 totaled $2.2 million under GAAP, and $3.0 million on a Pro
Forma basis assuming the Miramar Labs acquisition was completed on
July 1, 2017.
Gross profit for the third quarter 2017 was $6.3
million, or 65% of sales, compared to gross profit of $4.7 million,
or 72% of sales, for the same period in 2016. The decrease was
primarily due to the inclusion of miraDry, which carries a lower
margin than Breast Products.
Operating expenses for the third quarter 2017
were $20.2 million, compared to operating expenses of $14.5 million
for the same period in 2016. Operating expenses in the third
quarter 2017 were driven higher by Miramar related acquisition
costs as well as the inclusion of miraDry operating expenses
subsequent to the acquisition.
Net loss for the third quarter 2017 was $14.4
million, compared to $10.0 million for the same period in 2016.
On a non-GAAP basis, the Company reported
adjusted EBITDA loss of $(11.0) million for the third quarter
2017, compared to an adjusted EBITDA loss of $(8.5) million for the
third quarter 2016.
Net cash and cash equivalents as of September
30, 2017 were $37.6 million compared to $55.5 million at the end of
the second quarter 2017. During the quarter, the Company paid
a one-time legal settlement payment of $9 million related to the
previously announced settlement with its former breast implant
contract manufacturer.
Additional information on the Company’s
financial results can be found in Sientra’s Supplemental Financial
and Operational Information schedule by visiting the Investor
Relations section of Sientra’s website at www.sientra.com.
Conference CallSientra will
hold a conference call today, Tuesday, November 7, 2017 at 1:30
p.m. PT/4:30 p.m. ET to discuss the results.
The dial-in numbers are (844) 464-3933 for
domestic callers and (765) 507-2612 for international callers. The
conference ID is 6798858. A live webcast of the conference
call will be available on the Investor Relations section of the
Company's website at www.sientra.com.
Use of Pro Forma & Non-GAAP
Financial MeasuresSientra has supplemented its US
GAAP net sales and net income (loss) with a Pro Forma net sales and
non-GAAP measure of Adjusted EBITDA. Management believes that these
Pro Forma and non-GAAP financial measures provide useful
supplemental information to management and investors regarding the
performance of the Company, facilitates a more meaningful
comparison of results for current periods with previous operating
results, and assists management in analyzing future trends, making
strategic and business decisions and establishing internal budgets
and forecasts. Tables showing Pro Forma net sales and a
reconciliation of non-GAAP Adjusted EBITDA to GAAP net income
(loss), the most directly comparable GAAP measure, are provided in
the schedules below.
There are limitations in using non-GAAP
financial measures because they are not prepared in accordance with
GAAP and may be different from non-GAAP financial measures used by
other companies. These non-GAAP financial measures should not
be considered in isolation or as a substitute for GAAP financial
measures. Investors and potential investors should consider
non-GAAP financial measures only in conjunction with Sientra’s
financial statements prepared in accordance with GAAP and the
reconciliations of the non-GAAP financial measures provided in the
schedules below.
About SientraHeadquartered in
Santa Barbara, California, Sientra is a medical aesthetics company
committed to making a difference in patients’ lives by enhancing
their body image, growing their self-esteem and restoring their
confidence. The Company was founded to provide greater choice to
board-certified plastic surgeons and patients in need of medical
aesthetics products. The Company has developed a broad portfolio of
products with technologically differentiated characteristics,
supported by independent laboratory testing and strong clinical
trial outcomes. The Company sells its breast implants and breast
tissue expanders exclusively to board-certified and
board-admissible plastic surgeons and tailors its customer service
offerings to their specific needs. The Company also offers a
range of other aesthetic and specialty products including
BIOCORNEUM®, the professional choice in scar management, and
miraDry, the only FDA cleared device to reduce underarm sweat, odor
and permanently reduce hair of all colors.
Forward Looking StatementsThis
press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
based on management’s current assumptions and expectations of
future events and trends, which affect or may affect the Company’s
business, strategy, operations or financial performance, and actual
results may differ materially from those expressed or implied in
such statements due to numerous risks and uncertainties.
Forward-looking statements include, but are not limited to,
statements regarding the timing of FDA approval of the Company’s
new manufacturing facility, the expected benefits of the Miramar
acquisition, the Company’s ability to become a world class,
diversified aesthetics organization, and the timing of the
re-launch of the Company’s breast implants. Such statements are
subject to risks and uncertainties, including the dependence on
positive reaction from plastic surgeons and their patients and
risks associated with contracting with any third-party manufacturer
and supplier, including uncertainties that a PMA Supplement or
other regulatory requirements will be timely approved by the FDA or
other applicable regulatory authorities and that the integration of
recently acquired product lines will not achieve the anticipated
benefits. Additional factors that could cause actual results
to differ materially from those contemplated in this press release
can be found in the Risk Factors section of Sientra’s most recently
filed Quarterly Report on Form 10-Q and its Annual Report on Form
10-K for the year ended December 31, 2016. All statements
other than statements of historical fact are forward-looking
statements. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’
‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘continue,’’ ‘‘anticipate,’’
‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ or the negative of those terms,
and similar expressions that convey uncertainty of future events or
outcomes are intended to identify estimates, projections and other
forward-looking statements. Estimates, projections and other
forward-looking statements speak only as of the date they were
made, and, except to the extent required by law, the Company
undertakes no obligation to update or review any estimate,
projection or forward-looking statement.
Investor Contacts:
Patrick F. WilliamsSientra, Chief Financial
Officer (619) 675-1047patrick.williams@sientra.com
Zack Kubow / Brian JohnstonThe Ruth Group(646)
536-7020 / (646) 536-7028ir@Sientra.com
|
|
Sientra, Inc.Condensed Consolidated
Balance Sheets(In thousands)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
37,641 |
|
|
$ |
67,212 |
|
Accounts
receivable, net |
|
|
4,678 |
|
|
|
3,082 |
|
Inventories, net |
|
|
23,069 |
|
|
|
18,484 |
|
Insurance
recovery receivable |
|
|
75 |
|
|
|
9,375 |
|
Prepaid
expenses and other current assets |
|
|
4,074 |
|
|
|
1,852 |
|
Total
current assets |
|
|
69,537 |
|
|
|
100,005 |
|
Property and equipment,
net |
|
|
4,360 |
|
|
|
2,986 |
|
Goodwill |
|
|
12,507 |
|
|
|
4,878 |
|
Other intangible
assets, net |
|
|
19,504 |
|
|
|
6,186 |
|
Other assets |
|
|
736 |
|
|
|
228 |
|
Total
assets |
|
$ |
106,644 |
|
|
$ |
114,283 |
|
Liabilities and
Stockholders’
Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
3,990 |
|
|
$ |
3,555 |
|
Accrued
and other current liabilities |
|
|
13,669 |
|
|
|
6,507 |
|
Legal
settlement payable |
|
|
1,000 |
|
|
|
10,900 |
|
Customer
deposits |
|
|
5,572 |
|
|
|
6,559 |
|
Total
current liabilities |
|
|
24,231 |
|
|
|
27,521 |
|
Long-term
debt |
|
|
24,747 |
|
|
|
— |
|
Deferred
and contingent consideration |
|
|
12,341 |
|
|
|
1,637 |
|
Warranty
reserve and other long-term liabilities |
|
|
1,718 |
|
|
|
1,508 |
|
Total
liabilities |
|
|
63,037 |
|
|
|
30,666 |
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Total
stockholders’ equity |
|
|
43,607 |
|
|
|
83,617 |
|
Total
liabilities and stockholders’ equity |
|
$ |
106,644 |
|
|
$ |
114,283 |
|
|
Sientra, Inc.Condensed
Consolidated Statements of Operations(In thousands, except
per share and share amounts)(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net sales |
|
$ |
9,819 |
|
|
$ |
6,531 |
|
|
$ |
25,477 |
|
|
$ |
14,246 |
|
Cost of goods sold |
|
|
3,484 |
|
|
|
1,814 |
|
|
|
8,427 |
|
|
|
4,319 |
|
Gross
profit |
|
|
6,335 |
|
|
|
4,717 |
|
|
|
17,050 |
|
|
|
9,927 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
7,981 |
|
|
|
5,137 |
|
|
|
21,100 |
|
|
|
16,533 |
|
Research
and development |
|
|
2,911 |
|
|
|
2,052 |
|
|
|
7,677 |
|
|
|
7,370 |
|
General
and administrative |
|
|
9,298 |
|
|
|
5,684 |
|
|
|
23,753 |
|
|
|
16,327 |
|
Legal
settlement |
|
|
— |
|
|
|
1,618 |
|
|
|
10,000 |
|
|
|
1,618 |
|
Total
operating expenses |
|
|
20,190 |
|
|
|
14,491 |
|
|
|
62,530 |
|
|
|
41,848 |
|
Loss from
operations |
|
|
(13,855 |
) |
|
|
(9,774 |
) |
|
|
(45,480 |
) |
|
|
(31,921 |
) |
Other income (expense),
net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
54 |
|
|
|
16 |
|
|
|
112 |
|
|
|
47 |
|
Interest
expense |
|
|
(409 |
) |
|
|
(105 |
) |
|
|
(603 |
) |
|
|
(118 |
) |
Other
income (expense), net |
|
|
(155 |
) |
|
|
(52 |
) |
|
|
(151 |
) |
|
|
(54 |
) |
Total
other income (expense), net |
|
|
(510 |
) |
|
|
(141 |
) |
|
|
(642 |
) |
|
|
(125 |
) |
Loss
before income taxes |
|
|
(14,365 |
) |
|
|
(9,915 |
) |
|
|
(46,122 |
) |
|
|
(32,046 |
) |
Income taxes |
|
|
16 |
|
|
|
48 |
|
|
|
70 |
|
|
|
48 |
|
Net
loss |
|
$ |
(14,381 |
) |
|
$ |
(9,963 |
) |
|
$ |
(46,192 |
) |
|
$ |
(32,094 |
) |
Basic and diluted net
loss per share attributable to common stockholders |
|
$ |
(0.74 |
) |
|
$ |
(0.55 |
) |
|
$ |
(2.42 |
) |
|
$ |
(1.77 |
) |
Weighted average
outstanding common shares used for net loss per
share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
19,328,244 |
|
|
|
18,208,112 |
|
|
|
19,079,788 |
|
|
|
18,111,593 |
|
*The results for the 3 and 9 months ended September 30, 2017
includes Miramar as of the acquisition date of July 25, 2017
|
Sientra, Inc.Condensed
Consolidated Statements of Cash Flows(In
thousands)(Unaudited) |
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(46,192 |
) |
|
$ |
(32,094 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,037 |
|
|
|
734 |
|
Provision
for doubtful accounts |
|
|
84 |
|
|
|
384 |
|
Provision
for warranties |
|
|
133 |
|
|
|
133 |
|
Provision
for inventory |
|
|
468 |
|
|
|
519 |
|
Amortization of acquired inventory step-up |
|
|
802 |
|
|
|
— |
|
Change in
fair value of warrants |
|
|
151 |
|
|
|
57 |
|
Change in
fair value of deferred and contingent consideration |
|
|
758 |
|
|
|
— |
|
Non-cash
portion of debt extinguishment loss |
|
|
16 |
|
|
|
— |
|
Amortization of debt discount and issuance costs |
|
|
97 |
|
|
|
— |
|
Non-cash
interest expense |
|
|
1 |
|
|
|
23 |
|
Stock-based compensation expense |
|
|
4,777 |
|
|
|
2,630 |
|
Loss on
disposal of property and equipment |
|
|
12 |
|
|
|
124 |
|
Deferred
income taxes |
|
|
70 |
|
|
|
48 |
|
Changes
in assets and liabilities, net of effects from acquisitions: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
411 |
|
|
|
1,053 |
|
Inventories |
|
|
1,208 |
|
|
|
1,136 |
|
Insurance
recovery receivable |
|
|
9,300 |
|
|
|
(9,282 |
) |
Prepaid
expenses, other current assets and other assets |
|
|
(2,083 |
) |
|
|
(58 |
) |
Accounts
payable |
|
|
(478 |
) |
|
|
(986 |
) |
Accrued
and other liabilities |
|
|
3,613 |
|
|
|
460 |
|
Legal
settlement payable |
|
|
(9,900 |
) |
|
|
10,900 |
|
Customer
deposits |
|
|
(987 |
) |
|
|
(3,288 |
) |
Net cash
used in operating activities |
|
|
(35,702 |
) |
|
|
(27,507 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchase
of property and equipment |
|
|
(1,173 |
) |
|
|
(916 |
) |
Business
acquisitions, net of cash acquired |
|
|
(18,455 |
) |
|
|
(6,759 |
) |
Net cash
used in investing activities |
|
|
(19,628 |
) |
|
|
(7,675 |
) |
Proceeds
from exercise of stock options |
|
|
1,327 |
|
|
|
910 |
|
Proceeds
from issuance of common stock under ESPP |
|
|
647 |
|
|
|
753 |
|
Tax
payments related to shares withheld for vested restricted stock
units (RSUs) |
|
|
(569 |
) |
|
|
— |
|
Gross
borrowings under the Term Loan |
|
|
25,000 |
|
|
|
— |
|
Gross
borrowings under the Revolving Line of Credit |
|
|
5,000 |
|
|
|
— |
|
Payment
on the Revolving Line of Credit |
|
|
(5,000 |
) |
|
|
— |
|
Deferred
financing costs |
|
|
(646 |
) |
|
|
— |
|
Net cash
provided by financing activities |
|
|
25,759 |
|
|
|
1,663 |
|
Net
decrease in cash and cash equivalents |
|
|
(29,571 |
) |
|
|
(33,519 |
) |
Cash and cash
equivalents at: |
|
|
|
|
|
|
|
|
Beginning
of period |
|
|
67,212 |
|
|
|
112,801 |
|
End of
period |
|
$ |
37,641 |
|
|
$ |
79,282 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
|
|
|
Interest
paid |
|
$ |
305 |
|
|
$ |
96 |
|
Supplemental disclosure
of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Property
and equipment in accounts payable and accrued liabilities |
|
|
700 |
|
|
|
140 |
|
Acquisition of business, deferred and contingent consideration
obligations at fair value |
|
|
10,912 |
|
|
|
550 |
|
Forgiveness of SVB Loan commitment fee |
|
|
750 |
|
|
|
— |
|
*The results for the 9 months ended September 30, 2017 includes
Miramar as of the acquisition date of July 25, 2017
|
Sientra, Inc.Reconciliation
of Net Loss to Non-GAAP Adjusted EBITDA(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
Dollars, in
thousands |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net loss, as
reported |
|
$ |
(14,381 |
) |
|
$ |
(9,963 |
) |
|
$ |
(46,192 |
) |
|
$ |
(32,094 |
) |
Adjustments to net
loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
(income) expense and other, net |
|
|
510 |
|
|
|
141 |
|
|
|
642 |
|
|
|
125 |
|
Provision
for income taxes |
|
|
16 |
|
|
|
48 |
|
|
|
70 |
|
|
|
48 |
|
Depreciation and amortization - COGS |
|
|
425 |
|
|
|
— |
|
|
|
847 |
|
|
|
— |
|
Depreciation and amortization - G&A |
|
|
692 |
|
|
|
242 |
|
|
|
1,614 |
|
|
|
593 |
|
Depreciation and amortization - S&M |
|
|
30 |
|
|
|
28 |
|
|
|
106 |
|
|
|
77 |
|
Depreciation and amortization - R&D |
|
|
115 |
|
|
|
39 |
|
|
|
272 |
|
|
|
64 |
|
Stock-based compensation |
|
|
1,595 |
|
|
|
966 |
|
|
|
4,777 |
|
|
|
2,630 |
|
Legal
Settlement |
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
Total
adjustments to net loss |
|
|
3,383 |
|
|
|
1,464 |
|
|
|
18,328 |
|
|
|
3,537 |
|
Adjusted EBITDA |
|
$ |
(10,998 |
) |
|
$ |
(8,499 |
) |
|
$ |
(27,864 |
) |
|
$ |
(28,557 |
) |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
As a Percentage
of Revenue** |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net loss, as
reported |
|
|
(146.5 |
%) |
|
|
(152.5 |
%) |
|
|
(181.3 |
%) |
|
|
(225.3 |
%) |
Adjustments to net
loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
(income) expense and other, net |
|
|
5.2 |
% |
|
|
2.2 |
% |
|
|
2.5 |
% |
|
|
0.9 |
% |
Provision
for income taxes |
|
|
0.2 |
% |
|
|
0.7 |
% |
|
|
0.3 |
% |
|
|
0.3 |
% |
Depreciation and amortization - COGS |
|
|
4.3 |
% |
|
|
0.0 |
% |
|
|
3.3 |
% |
|
|
0.0 |
% |
Depreciation and amortization - G&A |
|
|
7.0 |
% |
|
|
3.7 |
% |
|
|
6.3 |
% |
|
|
4.2 |
% |
Depreciation and amortization - S&M |
|
|
0.3 |
% |
|
|
0.4 |
% |
|
|
0.4 |
% |
|
|
0.5 |
% |
Depreciation and amortization - R&D |
|
|
1.2 |
% |
|
|
0.6 |
% |
|
|
1.1 |
% |
|
|
0.4 |
% |
Stock-based compensation |
|
|
16.2 |
% |
|
|
14.8 |
% |
|
|
18.8 |
% |
|
|
18.5 |
% |
Legal
Settlement |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
39.3 |
% |
|
|
0.0 |
% |
Total
adjustments to net loss |
|
|
34.5 |
% |
|
|
22.4 |
% |
|
|
71.9 |
% |
|
|
24.8 |
% |
Adjusted EBITDA |
|
|
(112.0 |
%) |
|
|
(130.1 |
%) |
|
|
(109.4 |
%) |
|
|
(200.5 |
%) |
*The results for the 3 and 9 months ended September 30, 2017
includes Miramar as of the acquisition date of July 25,
2017. Therefore, results will not tie out to the Supplemental
Financial & Operational Information Schedule which is on a
Non-GAAP Pro Forma basis for all periods presented ** Adjustments
may not add to the total figure due to rounding
|
|
Pro Forma Net Sales(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
Dollars, in
thousands |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net sales – pro
forma |
|
$ |
10,668 |
|
|
$ |
10,834 |
|
|
$ |
35,681 |
|
|
$ |
30,280 |
|
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