Aurora Spine Corporation (“Aurora Spine” or the “Company”) (TSXV:
ASG) (US: AROSF), a company focused on bringing new solutions to
the spinal implant market through a series of innovative, minimally
invasive, regenerative spinal implant technologies, today announced
the financial results for the second quarter ended June 30, 2020.
All figures are in U.S. dollars.
Business Highlights
- Sequential improvement of gross margin to 40.9% in Q2, up from
34.6% in Q1, due to sales mix that included more proprietary
products
- Adjusted EBITDA (a non-GAAP figure) was $(0.05) million for the
second quarter of 2020, compared to $0.26 million in the second
quarter of 2019, despite 52% decrease in revenues
- Strong cash retention, company ended Q2 with $1.9 million in
cash
- Appointed Chad Clouse as Chief Financial Officer
Management Commentary
Mr. Trent Northcutt, President and Chief Executive Officer of
Aurora Spine, commented, “While the second quarter was a difficult
one as most elective surgeries were not conducted during April due
to the Covid-19 shutdown, we still were able to produce promising
results by advancing our strategy of converting more sales over to
Aurora products. This was evidenced in the second quarter’s gross
margin which was 41%, an improvement from 35% in the first quarter.
This improvement was accomplished as nearly half of revenue was
derived from our proprietary products, up from 38% in the first
quarter of 2020. I’m pleased to report that this trend has
continued into the third quarter.”
Mr. Northcutt continued, “While elective surgeries were minimal
the first half of Q2, Aurora was productive by having discussions
with surgeons using Aurora products and getting them updated with
new products. On the topic of new products, the engineering team
finalized product designs for a Posterior SI Joint fusion product
made from cortical bone (SILO) and the ZIP-Flex interlamar fixation
device. These products are an important part of our longer-term
growth strategy through the remainder of 2020 and into 2021, with
the SILO commencing limited in-patient surgeries during the third
quarter of this year.”
Mr. Northcutt concluded, “I’m proud of the Aurora team during
these trying times. We were prudent in managing expenses and have
preserved our capital that was raised earlier in the year. This
leaves the company in good financial standing and able to implement
our strategy of introducing more proprietary products to the
marketplace. This strategy is well underway and anticipate
continued progress for the remainder of 2020 and preparing for
renewed growth into 2021 and beyond.”
Financial Results
Total revenues for the second quarter of 2020 were $1.58 million
compared to $3.26 million for the second quarter of 2019, a
decrease of 52%. As previously reported, due to cancellations of
elective surgeries during the shutdown from Covid-19, procedures in
the month of April were minimal and was the prime cause of the
decrease in revenues during the second quarter compared to the
prior year period.
Gross margins on total revenues were 40.9% for the second
quarter of 2020, compared to 34.6% in Q1 of fiscal 2020 and 39.5%
during the second quarter of 2019. The improvement in gross margins
is attributable to the company’s strategy of converting third party
product sales to more proprietary, Aurora Spine products.
Total operating expenses were $0.83 million for the second
quarter of 2020, which included $0.13 million of non-cash expenses,
compared to $1.33 million, which included $0.3 million of non-cash
expenses for the second quarter of 2019. The change in operating
expenses were lower due to a decrease in expenses due to the
shutdown. The company continues to maintain cost controls to
preserve its capital for growth initiatives.
Net income was $0.03 million for the second quarter of 2020,
compared to a loss of $(0.04) million in the second quarter of
2019.
Adjusted EBITDA (a non-GAAP figure) was $(0.05) million for the
second quarter of 2020, compared to $0.26 million in the second
quarter of 2019.
Full financial statements can be found on SEDAR at
(www.sedar.com).
SELECTED BALANCE SHEET INFORMATION
The following table summarizes selected key financial data.
As at |
June 30, 2020$ |
December 31, 2019$ |
December 31, 2018$ |
Cash |
1,943,041 |
444,741 |
856,504 |
Trade receivables |
1,589,458 |
2,443,096 |
1,584,269 |
Prepaid expenses and deposits |
176,297 |
262,217 |
219,301 |
Inventory |
1,700,386 |
1,529,474 |
2,562,957 |
Current assets |
5,409,182 |
4,679,528 |
5,223,031 |
Intangible assets |
831,607 |
838,915 |
853,529 |
Property and equipment |
1,132,970 |
1,155,249 |
766,602 |
Total assets |
7,373,759 |
6,673,692 |
6,843,162 |
Current liabilities |
2,098,685 |
2,523,223 |
1,868,960 |
Long-term liabilities |
2,348,757 |
2,382,444 |
2,016,000 |
Share capital |
21,850,680 |
20,669,713 |
20,661,153 |
SELECTED QUARTERLY INFORMATION
The Company’s functional currency is the US
dollar (USD). The functional currency of the Company’s US
subsidiary Aurora is USD.
Operating results for each quarter for the last two fiscal years
are presented in the table below.
Quarters ended |
June 30, 2020$ |
March 31, 2020$ |
December 31, 2019$ |
September 30, 2019$ |
June 30, 2019$ |
March 31,2019$ |
December 31, 2018$ |
September 30, 2018$ |
Revenue |
1,580,450 |
|
2,259,251 |
|
2,632,649 |
|
2,530,602 |
|
3,260,247 |
|
2,729,221 |
|
2,500,976 |
|
2,675,947 |
|
Cost of goods sold |
(934,058 |
) |
(1,478,037 |
) |
(2,550,418 |
) |
(1,518,986 |
) |
(1,971,382 |
) |
(1,564,504 |
) |
(1,266,038 |
) |
(1,319,018 |
) |
Gross profit |
646,392 |
|
781,214 |
|
82,231 |
|
1,011,616 |
|
1,288,865 |
|
1,164,717 |
|
1,234,938 |
|
1,356,929 |
|
Operating expenses |
831,239** |
|
1,341,757 |
|
669,399* |
|
1,429,015 |
|
1,332,970 |
|
1,370,318* |
|
1,324,231* |
|
1,217,196* |
|
EBITDAC** |
170,549 |
|
(294,721 |
) |
(837,587 |
) |
(116,189 |
) |
259,250 |
|
86,433 |
|
157,823 |
|
396,809 |
|
Net income (loss) |
34,475 |
|
(560,543 |
) |
(587,168 |
) |
(417,399 |
) |
(44,105 |
) |
(205,601 |
) |
(89,293 |
) |
139,733 |
|
Basic and diluted income (loss) per share*** |
0.00 |
|
(0.01 |
) |
(0.03 |
) |
(0.01 |
) |
(0.00 |
) |
(0.00 |
) |
(0.00 |
) |
0.00 |
|
* Adjusted by gains and
(losses) on sale of equipment.** Excludes gain and (losses) from
Other income (expense) of $219,322. These are anticipated to
be non-recurring.*** EBITDAC is a non GAAP, non
IFRS measure defined as Earnings before Interest, Tax,
Depreciation, Amortization and Stock based compensation. This
amount includes Gains (losses) on sale of property and equipment
and Other income (expense).**** Outstanding
options and warrants have not been included in the calculation of
the diluted loss per share as they would have the effect of being
anti-dilutive.
COVID-19 Impact to Q2 2020
As mentioned in Q1 financial results, due to Covid-19, many
elective surgeries were cancelled during the national shutdown in
mid-March through early-May. The Q2 was impacted as very little
procedures occurred in the month of April.
During May and June, elective surgeries resumed to approximately
80% of pre-covid-19 levels and have resumed at that level or better
starting into the third quarter of 2020. If covid-19 levels remain
low, the company anticipates further resumption of elective
surgeries throughout the country, until another wave/spike in cases
occur, if at all.
While the company cannot predict what elective surgery capacity
levels will be at any given time, the company has seen that most
elective surgeries that were cancelled due to covid-19 were
rescheduled for another date once elective surgeries were allowed
to resume and some were shifted out of hospitals into surgery
centers. This is due to the patient scheduling a surgery due to
severe back pain, which disables the patient from normal activities
and doesn’t improve unless a procedure is performed.
About Aurora Spine
Aurora Spine is focused on bringing new solutions to the spinal
implant market through a series of innovative, minimally invasive,
regenerative spinal implant technologies.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-Looking Statements
This news release contains forward-looking information that
involves substantial known and unknown risks and uncertainties,
most of which are beyond the control of Aurora Spine, including,
without limitation, those listed under "Risk Factors" and
"Cautionary Statement Regarding Forward-Looking Information" in
Aurora Spine's final prospectus (collectively, "forward-looking
information"). Forward-looking information in this news release
includes information concerning the proposed use and success of the
company’s products in surgical procedures. Aurora Spine cautions
investors of Aurora Spine's securities about important factors that
could cause Aurora Spine's actual results to differ materially from
those projected in any forward-looking statements included in this
news release. Any statements that express, or involve discussions
as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance are not historical facts and may be
forward-looking and may involve estimates, assumptions and
uncertainties which could cause actual results or outcomes to
differ unilaterally from those expressed in such forward-looking
statements. No assurance can be given that the expectations set out
herein will prove to be correct and, accordingly, prospective
investors should not place undue reliance on these forward-looking
statements. These statements speak only as of the date of this
press release and Aurora Spine does not assume any obligation to
update or revise them to reflect new events or circumstances.
Contact:
Aurora Spine Corporation
Trent Northcutt President and Chief Executive Officer (760)
424-2004
Chad Clouse Chief Financial Officer (760)
424-2004 www.aurora-spine.com
Adam Lowensteiner LYTHAM PARTNERS, LLC Phoenix | New York
Telephone: 646-829-9700 arosf@lythampartners.com
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