Evolus, Inc. (Nasdaq: EOLS), a performance beauty company with a
customer-centric approach focused on delivering breakthrough
products, today reported financial results for the second quarter
ended June 30, 2020 and provided a business update.
“We experienced a rapid recovery of our business in the second
quarter. Approximately 90 percent of our net revenue was
generated in the second half of the quarter as offices re-opened
from COVID-19 related shutdowns,” said David Moatazedi, President
and Chief Executive Officer. “In addition, we took decisive action
to reset our expense base and rewire Evolus with greater leverage
of our proprietary digital platform.”
Mr. Moatazedi continued, “The strength of our Jeuveau® launch
continued in the second quarter. We increased our purchasing
account base, grew our re-order rates and introduced Evolus
Rewards, our new consumer loyalty program. We also launched a
stimulus program to support customers as they re-opened their
practices. We believe these programs drove our strong second
quarter performance and will continue to be fundamental drivers of
our growth in the back half of the year.”
Second Quarter 2020 Financial Results
- Net revenues were $7.8 million, up from $2.3 million in the
second quarter of 2019. • Approximately 90% of net revenue
was generated in the second half of the second quarter of
2020.• Jeuveau® launched in the second half of the second
quarter of 2019.
- Gross margin percentage was approximately 75%, up from 71% in
the second quarter of 2019.
- GAAP operating expenses decreased by 34% to $24.7 million from
$37.6 million in the second quarter of 2019. Included in
operating expenses for the second quarter of 2020 were $3.0 million
of restructuring costs associated with headcount and other expense
reductions announced in April 2020.
- Non-GAAP operating expenses decreased by 44% to $18.3 million
from $32.9 million in the second quarter of 2019. Non-GAAP
operating expenses in the second quarter of 2020 exclude expenses
resulting from the revaluation of the contingent royalty obligation
of $2.4 million, stock-based compensation of $2.4 million
and depreciation and amortization of $1.7 million. Non-GAAP
operating expenses in the second quarter 2019 exclude expenses
resulting from the revaluation of the contingent royalty obligation
of $1.3 million, stock-based compensation of $2.5 million
and depreciation and amortization of $1.0 million.
- GAAP loss from operations decreased by 48% to $18.9
million from $36.0 million in the second quarter of
2019.
- Non-GAAP loss from operations decreased by 60% to $12.4 million
down from $31.3 million in the second quarter of 2019.
- GAAP net loss decreased by 44% to $21.1 million from $37.6
million in the second quarter of 2019.
- Cash, cash equivalents and short-term investments as of June
30, 2020 were $84.8 million.
- In July 2020, the Company received a $40.0 million investment
from its strategic partner, Daewoong Pharmaceutical Co. Ltd. in the
form of a five-year, unsecured, subordinated, 3% convertible note
at a conversion price of $13.00.
- Pro forma cash¹ position was $124.8 million as of June 30,
2020.
- As of June 30, 2020, the Company had 33.7 million shares
of common stock outstanding.
Key 2020 Business Highlights
- Strong underlying market demand for Jeuveau® in the second
quarter of 2020 driven by an 8% increase in purchasing accounts to
over 4,400 accounts2 and re-order rates2 increased to 66%.
- Launched two key marketing initiatives in May:• Evolus
Rewards, a consumer loyalty program providing patients with
improved affordability and instant savings. As of June 30, 2020,
greater than 1,300 purchasing accounts opted into the program and
over 16,500 patients enrolled.• Evolus 350˚, a post COVID-19
promotional program offering customers a $350 per vial price when
the purchase is made via the Evolus Practice app.
- On July 6, 2020, the Company announced that the Administrative
Law Judge (ALJ) overseeing the United States International Trade
Commission (USITC) case filed by Allergan and Medytox in January
2019 against Daewoong and Evolus released a Notice of Initial
Determination. The non-binding initial decision by the ALJ finds a
violation of Section 337 of the Tariff Act of 1930. All
aspects of the ALJ’s ruling are subject to review by the Commission
itself. The final determination is targeted for November 6, 2020.
Jeuveau® launch and product supply are unaffected by the initial
determination.
2020 Financial Outlook
- Evolus continues to anticipate its non-GAAP operating expenses
for the second half of 2020 will be less than $42 million. See “Use
of Non-GAAP Financial Measures” below for additional information
about this forward-looking non-GAAP financial measure.
- Evolus expects its cash, cash equivalents and short-term
investments will be sufficient to fund its operations for at least
the next twelve months.
The Company’s financial outlook is based on a number of
assumptions and subject to uncertainties. In the event that
USITC affirms the initial determination of the ALJ by entering a
limited exclusion order preventing us from importing Jeuveau® into
the United States and a cease and desist order that would prevent
us from selling Jeuveau® in the United States, the Company’s
financial outlook would be materially and negatively impacted.
Conference Call Information
Management will host a conference call and webcast to discuss
Evolus’ financial results today at 4:30 p.m. ET. The dial-in
numbers are +1 (866) 916-2317 for domestic callers and +1 (703)
925-2662 for international callers, and the conference ID is
7575816.
A replay of the call will be available following its completion
through August 17, 2020. To access the replay, dial +1 (855)
859-2056 for domestic callers and +1 (404) 537-3406 for
international callers and use the replay conference ID 7575816.
A live audio webcast of the call will be available on the
Investor Relations page of the Evolus, Inc. website,
investors.evolus.com. A replay of the webcast will be archived on
Evolus’ website for 30 days following the completion of the
call.
About Evolus, Inc.
Evolus is a performance beauty company with a
customer-centric approach focused on delivering breakthrough
products. In 2019, the U.S. Food and Drug
Administration approved Jeuveau® (prabotulinumtoxinA-xvfs),
the first and only neurotoxin dedicated exclusively to aesthetics
and manufactured in a state-of-the-art facility using Hi-Pure™
technology. Jeuveau® is powered by Evolus’ unique
technology platform and is designed to transform the aesthetic
market by eliminating the friction points existing for customers
today. Visit us at: www.evolus.com.
Forward-Looking Statements
This press release contains forward-looking statements as
defined under the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical fact, are
statements that could be deemed forward-looking statements,
including statements that relate to the status of regulatory
processes, future plans, events, prospects or performance and
statements containing the words “plans,” “expects,” “believes,”
“strategy,” “opportunity,” “anticipates,” “outlook,” “designed,” or
other forms of these words or similar expressions, although not all
forward-looking statements contain these identifying words. The
company’s forward-looking statements include, but are not limited
to, statements made by Mr. Moatazedi related to the effectiveness
of our customer and consumer programs, the efficiency of the
company’s business model and expectations for share gain and our
financial outlook as well as the company’s expectation that it has
cash, cash equivalents and short term investments that will be
sufficient to fund its operations for at least the next twelve
months.
Forward-looking statements are based on current estimates and
assumptions made by management of the company and are believed to
be reasonable, though they are inherently uncertain and difficult
to predict.
Forward-looking statements involve risks and uncertainties that
could cause actual results or experience to differ materially from
that expressed or implied by the forward-looking statements.
Other factors that could cause actual results or experience to
differ materially from that expressed or implied by the
forward-looking statements include uncertainties associated with
our ability to continue to import Jeuveau® into, and sell Jeuveau®
within, the United States if the USITC affirms, in whole or in
part, the initial determination issued by the ALJ in a final
determination and imposes a limited exclusion order preventing us
from importing Jeuveau® into the United States and a cease and
desist order that would prevent us from marketing and selling
Jeuveau® in the United States; the continued impact of COVID-19 on
our business and the economy generally; the success of the launch
of Jeuveau®, customer and consumer adoption of Jeuveau®, the
efficiency and operability of our digital platform, competition and
market dynamics, our ongoing legal proceedings and our ability to
maintain regulatory approval of Jeuveau® and other risks described
in the section entitled “Risk Factors” in our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2020 as filed with the
Securities and Exchange Commission on May 11, 2020, which is
available online at www.sec.gov. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof. Except as required by law, Evolus
undertakes no obligation to update or revise any forward-looking
statements to reflect new information, changed circumstances or
unanticipated events. If the company does update or revise
one or more of these statements, investors and others should not
conclude that the company will make additional updates or
corrections.
Use of Non-GAAP Financial Measures
Evolus’ financial results are prepared in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). This press release and the reconciliation tables
included in the financial schedules below include non-GAAP
operating expenses and non-GAAP loss from operations, which are
calculated as GAAP operating expenses and GAAP loss from
operations, excluding: (i) the revaluation of contingent royalty
obligations, (ii) stock-based compensation expense, and (iii)
depreciation and amortization. Management believes that non-GAAP
operating expenses and non-GAAP loss from operations are useful in
helping to identify the company’s core operating performance and
enables management to consistently analyze the period-to-period
financial performance of the core business operations. Management
also believes that non-GAAP operating expenses and non-GAAP loss
from operations will enable investors to assess the company in the
same way that management assesses the company’s current and future
operations. The company’s definitions of non-GAAP operating
expenses and non-GAAP loss from operations have limitations as an
analytical tool and may differ from other companies reporting
similarly named measures. Non-GAAP measures should be
considered in addition to results prepared in accordance with GAAP
but should not be considered a substitute for or superior to GAAP
results.
For a reconciliation of our historical non-GAAP operating
expenses and non-GAAP loss from operations presented herein to GAAP
operating expenses and GAAP loss from operations, the most directly
comparable GAAP financial measures, please see “Reconciliation of
GAAP Operating Expenses and GAAP Loss from Operations to Non-GAAP
Operating Expenses and Non-GAAP Loss from Operations” in the
financial schedules below. In addition, this press release includes
information regarding the company’s expected non-GAAP operating
expenses for the third and fourth quarters of 2020. Evolus
has not provided a reconciliation of such forward-looking non-GAAP
operating expenses to GAAP operating expenses, the most directly
comparable GAAP financial measure, because, without unreasonable
efforts, it is unable to predict with reasonable certainty the
amount or timing of the non-GAAP adjustments that are used to
calculate non-GAAP operating expenses, including any revaluation of
contingent royalty obligation, stock-based compensation expense and
depreciation and amortization. These adjustments are
uncertain, depend on various factors that are beyond our control
and could have a material impact on the company’s forward-looking
GAAP operating expenses.
Jeuveau® is a registered trademark of Evolus, Inc.Hi-Pure™ is a
trademark of Daewoong Pharmaceutical Co, Ltd
1 Represents June 30, 2020 cash, cash equivalents and short-term
investments of $84.8 million plus gross proceeds received in July
2020 from the closing of the $40.0 million convertible debt
offering. 2 Represents cumulative statistics from the launch of
Jeuveau® in May 2019.
Evolus, Inc. Contacts:
Investor Contact:Ashwin Agarwal, Evolus, Inc.Vice President,
Finance, Investor Relations & TreasuryTel:
+1-949-284-4559Email: IR@Evolus.com
Media Contact:Crystal Muilenburg, Evolus, Inc.Vice President,
Corporate Communications & Public RelationsTel:
+1-949-284-4506Email: media@evolus.com
Evolus, Inc.Statements
of Operations and Comprehensive Loss(Unaudited, in
thousands, except loss per share data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net revenues |
$ |
7,806 |
|
|
$ |
2,311 |
|
|
$ |
18,302 |
|
|
$ |
2,311 |
|
Cost of sales (excludes amortization of intangible assets) |
1,948 |
|
|
660 |
|
|
6,167 |
|
|
660 |
|
Gross profit |
5,858 |
|
|
1,651 |
|
|
12,135 |
|
|
1,651 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
17,553 |
|
|
34,892 |
|
|
48,852 |
|
|
52,411 |
|
Research and development |
145 |
|
|
509 |
|
|
653 |
|
|
2,862 |
|
Revaluation of contingent royalty obligation payable to Evolus
Founders |
2,433 |
|
|
1,269 |
|
|
(7,451 |
) |
|
6,182 |
|
Depreciation and amortization |
1,658 |
|
|
978 |
|
|
3,407 |
|
|
1,462 |
|
Restructuring costs |
2,956 |
|
|
— |
|
|
2,956 |
|
|
— |
|
Total operating expenses |
24,745 |
|
|
37,648 |
|
|
48,417 |
|
|
62,917 |
|
Loss from operations |
(18,887 |
) |
|
(35,997 |
) |
|
(36,282 |
) |
|
(61,266 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Interest income |
224 |
|
|
615 |
|
|
598 |
|
|
1,004 |
|
Interest expense |
(2,464 |
) |
|
(2,412 |
) |
|
(4,922 |
) |
|
(3,030 |
) |
Loss before income taxes: |
(21,127 |
) |
|
(37,794 |
) |
|
(40,606 |
) |
|
(63,292 |
) |
Income tax expense (benefit) |
(2 |
) |
|
(227 |
) |
|
254 |
|
|
(14,750 |
) |
Net loss |
$ |
(21,125 |
) |
|
$ |
(37,567 |
) |
|
$ |
(40,860 |
) |
|
$ |
(48,542 |
) |
Other comprehensive gain
(loss): |
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities, net of
tax |
(206 |
) |
|
52 |
|
|
13 |
|
|
43 |
|
Comprehensive loss |
$ |
(21,331 |
) |
|
$ |
(37,515 |
) |
|
$ |
(40,847 |
) |
|
$ |
(48,499 |
) |
Net loss per share, basic and
diluted |
$ |
(0.63 |
) |
|
$ |
(1.37 |
) |
|
$ |
(1.21 |
) |
|
$ |
(1.77 |
) |
Weighted-average shares
outstanding used to compute basic and diluted net loss per
share |
33,733 |
|
|
27,409 |
|
|
33,727 |
|
|
27,370 |
|
|
Evolus, Inc.Summary of
Balance Sheet Data(Unaudited, in
thousands)
|
June 30, 2020 |
|
December 31, 2019 |
Balance Sheet
Data: |
|
|
|
Cash and cash equivalents |
$ |
29,772 |
|
|
$ |
109,892 |
|
Short-term investments |
54,982 |
|
|
19,911 |
|
Total cash, cash equivalents and short-term investments |
$ |
84,754 |
|
|
$ |
129,803 |
|
|
|
|
|
Working capital |
$ |
88,536 |
|
|
$ |
127,758 |
|
Total assets |
$ |
194,544 |
|
|
$ |
240,442 |
|
Total current liabilities |
$ |
19,462 |
|
|
$ |
24,439 |
|
Total liabilities |
$ |
150,941 |
|
|
$ |
160,985 |
|
Accumulated deficit |
$ |
(253,919 |
) |
|
$ |
(213,059 |
) |
Total stockholders’
equity |
$ |
43,603 |
|
|
$ |
79,457 |
|
|
Evolus,
Inc.Reconciliation of GAAP Operating Expenses and
GAAP Loss from Operations to Non-GAAP Operating
Expenses and Non-GAAP Loss from Operations(in
thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
GAAP operating expenses |
$ |
24,745 |
|
|
$ |
37,648 |
|
|
$ |
48,417 |
|
|
$ |
62,917 |
|
GAAP loss from
operations |
$ |
18,887 |
|
|
$ |
35,997 |
|
|
$ |
36,282 |
|
|
$ |
61,266 |
|
Adjustments: |
|
|
|
|
|
|
|
Revaluation of contingent royalty obligation |
2,433 |
|
|
1,269 |
|
|
(7,451 |
) |
|
6,182 |
|
Stock-based compensation: |
|
|
|
|
|
|
|
Included in selling, general and administrative |
2,338 |
|
|
2,282 |
|
|
4,878 |
|
|
4,026 |
|
Included in research and development |
36 |
|
|
175 |
|
|
124 |
|
|
429 |
|
Depreciation and amortization |
1,658 |
|
|
978 |
|
|
3,407 |
|
|
1,462 |
|
Non-GAAP operating
expenses |
$ |
18,280 |
|
|
$ |
32,944 |
|
|
$ |
47,459 |
|
|
$ |
50,818 |
|
Non-GAAP loss from
operations |
$ |
12,422 |
|
|
$ |
31,293 |
|
|
$ |
35,324 |
|
|
$ |
49,167 |
|
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