Advanced Energy Sales of $5.3 million in Q2,
up 69% year-over-year
Apyx Medical Corporation (NASDAQ:APYX) (the “Company”), a
maker of medical devices and supplies and the developer of Helium
Plasma Technology, marketed and sold as Renuvion® in the cosmetic
surgery market and J-Plasma® in the hospital surgical market, today
reported financial results for its second quarter ended June 30,
2019.
Second Quarter 2019 Financial
Summary:
- Total Q2 revenue from continuing operations of $6.6 million, up
78% year-over-year.
- Advanced Energy revenue of $5.3 million, up 69%
year-over-year.
- OEM revenue of $1.3 million, up 125% year-over-year.
- Total Q2 GAAP net loss from continuing operations of $4.3
million versus total GAAP net loss from continuing operations of
$2.9 million for the second quarter of 2018.
- Total Q2 adjusted EBITDA loss from continuing operations of
$3.7 million versus adjusted EBITDA loss from continuing operations
of $2.4 million for 2018.
Highlights Subsequent to Quarter
End:
- On July 1, 2019, the Company announced it has been added to the
Russell 3000® and Russell 2000® Indexes. The Company’s inclusion in
the indexes occurred as part of the annual reconstitution by FTSE
Russell of its U.S. equity indexes and became effective on July 1,
2019.
- On July 15, 2019, the Company announced the appointment of four
members to its Medical Advisory Board: Dr. Brian M. Kinney, Dr.
Paul G. Ruff, Dr. Richard D. Gentile and Dr. Edward M.
Zimmerman.
- On July 31, 2019, the Company announced it has enhanced its
clinical and regulatory affairs teams with the appointment of Kari
Larson and Libet Garber, Ph.D. to the positions of Senior Director
of Clinical Affairs and Director of Global Regulatory Affairs,
respectively.
- On August 5, 2019, the company announced it had received U.S.
Food and Drug Administration (FDA) 510(k) clearance to market and
sell its next-generation J-Plasma Precise Handpiece.
- On August 6, 2019, the Company announced it had appointed
Minnie Baylor-Henry to its Board of Directors, effective August 1,
2019, where she will be chairing the newly formed Regulatory and
Compliance Committee. Ms. Baylor-Henry brings with her more than 20
years of recognized leadership in Regulatory Affairs, including
leadership positions at Johnson & Johnson and the U.S. Food and
Drug Administration.
Management Comments:
“Apyx Medical is excited to report another quarter of strong
revenue growth driven by global demand for our Renuvion generators
and handpieces in the cosmetic surgery market,” said Charlie
Goodwin, President and Chief Executive Officer. “I am particularly
pleased with our operating and financial performance in light of
the challenges we faced during the second quarter, which was made
possible by the hard work and dedication of our organization.
During the quarter, we continued to execute on our strategic growth
objectives to increase our share of the $1.5 billion U.S. cosmetic
surgery market, penetrate existing international markets and expand
into new countries with strong demand from cosmetic surgeons for
our highly differentiated Renuvion technology. Importantly, we also
made excellent progress in our pursuit of new clinical indications
for Renuvion in the U.S., with the submission in late July of an
investigational device exemption, or IDE, application for a new
study evaluating the use of Renuvion in dermal resurfacing
procedures. We remain committed to taking a methodical approach to
obtaining new clinical indications for our Renuvion technology,
supported by the strategic insight and efforts of our recently
enhanced clinical and regulatory affairs teams.”
Mr. Goodwin continued: “We are raising our 2019 revenue, net
loss and adjusted EBITDA loss guidance range based upon the
stronger than expected financial results that we have achieved in
the second quarter and outlook for the rest of 2019. As we enter
the second half of 2019, we will continue to pursue our strategic
initiatives and make targeted investments in order to deliver
strong, sustained growth and profitability in the years to come.
Looking ahead, with truly innovative technologies, a solid balance
sheet and an entire organization dedicated to supporting our
surgeon customers and improving patient outcomes, we remain
convinced that Apyx Medical is uniquely positioned to reshape the
cosmetic surgery market, while delivering attractive returns for
our shareholders.”
Second Quarter 2019
Results:
The following table represents revenue from continuing
operations by reportable segment:
Three Months Ended June
30,
Increase/Decrease
Six Months Ended June
30,
Increase/Decrease
(In thousands)
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Advanced Energy
$
5,269
$
3,113
$
2,156
69.3
%
$
9,640
$
5,742
$
3,898
67.9
%
OEM
1,299
578
721
124.7
%
2,751
1,346
1,405
104.4
%
Total
$
6,568
$
3,691
$
2,877
77.9
%
$
12,391
$
7,088
$
5,303
74.8
%
Total revenue from continuing operations for second quarter 2019
increased $2.9 million, or 77.9%, to $6.6 million, compared to $3.7
million in the second quarter of 2018. Sales of the Company’s
Advanced Energy generators and handpieces drove the increase in
total revenue in second quarter 2019, with OEM segment sales
contributing modestly to the year-over-year increase in total
revenue from continuing operations during the second quarter 2019
period. Advanced Energy segment sales increased $2.2 million, or
69.3% year-over-year, to $5.3 million, compared to $3.1 million
last year. OEM segment sales increased $0.7 million, or 124.7%
year-over-year, to $1.3 million, compared to $0.6 million last
year.
Three Months Ended June
30,
Increase/Decrease
Six Months Ended June
30,
Increase/Decrease
(In thousands)
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Domestic
$
4,540
$
2,960
$
1,580
53.4
%
$
8,644
$
5,718
$
2,926
51.2
%
International
2,028
731
$
1,297
177.4
%
3,747
1,370
$
2,377
173.5
%
Total
$
6,568
$
3,691
$
2,877
77.9
%
$
12,391
$
7,088
$
5,303
74.8
%
For the second quarter 2019, revenue from continuing operations
in the United States increased $1.6 million, or 53.4%
year-over-year, to $4.5 million, and international revenue from
continuing operations increased $1.3 million, or 177.4%
year-over-year, to $2.0 million. International sales growth in the
second quarter was primarily driven by sales to international
distributors in the Company’s Advanced Energy segment.
Gross profit for the second quarter of 2019 increased $1.9
million, or 76.3% year-over-year, to $4.5 million, compared to $2.5
million for second quarter of 2018. Gross margin for the second
quarter of 2019 was 68.1%, compared to 68.7% last year. The primary
drivers of the decrease in gross profit margin were Advanced Energy
product mix and Advanced Energy sales outside the U.S., which
represented a higher mix of total sales in the second quarter of
2019 compared to last year. OEM gross margins were lower in the
second quarter of 2019 when compared to the prior year period,
driven primarily by revenue related to our new Product,
Manufacturing, and Supply agreements with Symmetry, which did not
contribute to revenue results in the prior period.
Operating expenses from continuing operations for the second
quarter of 2019 increased $3.5 million, or 63.4% year-over-year, to
$8.9 million, compared to $5.5 million for the second quarter of
2018. The year-over-year change in operating expenses from
continuing operations was primarily driven by a $1.5 million
increase in salaries and related costs, a $1.0 million increase in
professional services costs, a $0.9 million increase in selling,
general, and administration, and a $0.1 million increase in
research and development expenses.
Net loss from continuing operations for second quarter 2019 was
$(4.3) million, or $(0.13) per diluted share, compared to a net
loss from continuing operations of $(2.9) million, or $(0.09) per
diluted share, for the second quarter of 2018. Total income from
discontinued operations, net of tax, was $2.7 million in the second
quarter of 2018.
As of June 30, 2019, the Company had cash and equivalents of
$67.4 million as compared to cash and equivalents of $16.5 million
and short-term investments of $61.7 million as of December 31,
2018. The Company had working capital of $74.1 million as of June
30, 2019 as compared to $81.8 million as of December 31, 2018.
First Half of 2019 Results:
Total revenue for the six months ended June 30, 2019 increased
$5.3 million, or 74.8%, to $12.4 million, compared to $7.1 million
in the six months ended June 30, 2018. Total revenue growth was
driven by a 67.9% increase in Advance Energy sales and a 104.4%
increase in OEM sales.
Net loss from continuing operations for the six months ended
June 30, 2019 was $(9.0) million, or $(0.27) per diluted share,
compared to a loss from continuing operations of $(5.7) million, or
$(0.17) per diluted share, for the six months ended June 30,
2018.
2019 Financial Outlook:
The Company is updating its fiscal year 2019 financial
guidance:
- Total revenue in the range of $26.5 million to $27.5 million,
representing growth of 59% to 65% year-over-year, compared to total
revenue from continuing operations of $16.7 million in fiscal year
2018. The Company’s prior guidance range for total revenue was
$25.5 million to $26.5 million, representing growth of 53% to 59%
year-over-year.
- Total revenue guidance assumes:
- Advanced Energy revenue in the range of $21.5 million to $22.5
million, representing growth of 65% to 72% year-over-year, compared
to Advanced Energy revenue of $13.1 million in fiscal year 2018.
The Company’s prior guidance range for Advanced Energy revenue was
$20.5 million to $21.5 million, representing growth of 57% to 65%
year-over-year.
- The Company continues to expect OEM revenue of $5.0 million,
representing growth of 38% year-over-year, compared to $3.6 million
for fiscal year 2018.
- GAAP net loss in the range of $22.4 million to $21.4 million,
compared to GAAP net loss from continuing operations of $9.5
million in fiscal year 2018. The Company’s prior guidance range for
GAAP net loss was $23.5 million to $22.5 million.
- Adjusted EBITDA loss in the range of $18.8 million to $17.8
million, compared to adjusted EBITDA loss from continuing
operations of $11.7 million in fiscal year 2018. The Company’s
prior guidance range for Adjusted EBITDA loss was $19.9 million to
$18.9 million.
Conference Call Details:
Management will host a conference call at 4:30 p.m. Eastern Time
on August 7 to discuss the results of the quarter and to host a
question and answer session. To listen to the call by phone,
interested parties may dial 844-507-6493 (or 647-253-8641 for
international callers) and provide access code 5115769.
Participants should ask for the Apyx Medical Corporation Call. A
live webcast of the call will be accessible via the Investor
Relations section of the Company’s website and at:
https://event.on24.com/wcc/r/2017153/8BF3360A6C8B7308D4E8C83EACC0EF15.
A telephonic replay will be available approximately two hours
after the end of the call through August 21, 2019. The replay can
be accessed by dialing 800-585-8367 for U.S. callers or
416-621-4642 for international callers and using the replay access
code: 5115769. The webcast will be archived on the Investor
Relations section of the Company’s website.
About Apyx Medical
Corporation:
Apyx Medical Corporation (formerly Bovie Medical Corporation) is
an advanced energy technology company with a passion for elevating
people’s lives through innovative products in the cosmetic and
surgical markets. Known for its innovative Helium Plasma
Technology, Apyx is solely focused on bringing transformative
solutions to the physicians and patients it serves. The company’s
Helium Plasma Technology is marketed and sold as Renuvion® in the
cosmetic surgery market and J-Plasma® in the hospital surgical
market. Renuvion® offers plastic surgeons, fascial plastic surgeons
and cosmetic physicians a unique ability to provide controlled heat
to the tissue to achieve their desired results. The J-Plasma®
system allows surgeons to operate with a high level of precision
and virtually eliminating unintended tissue trauma. The Company
also leverages its deep expertise and decades of experience in
unique waveforms through original equipment manufacturing (OEM)
agreements with other medical device manufacturers. For further
information about the Company and its products, please refer to the
Apyx Medical Corporation website at www.ApyxMedical.com.
Cautionary Statement on Forward-Looking
Statements:
Certain matters discussed in this release and oral statements
made from time to time by representatives of the Company may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and the Federal
securities laws. Although the Company believes that the
expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
Forward-looking information is subject to certain risks, trends
and uncertainties that could cause actual results to differ
materially from those projected. Many of these factors are beyond
the Company’s ability to control or predict. Important factors that
may cause actual results to differ materially and that could impact
the Company and the statements contained in this release can be
found in the Company’s filings with the Securities and Exchange
Commission including the Company’s Report on Form 10-K for the year
ended December 31, 2018 and subsequent Form 10-Q filings. For
forward-looking statements in this release, the Company claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The Company assumes no obligation to update or supplement any
forward-looking statements whether as a result of new information,
future events or otherwise.
APYX MEDICAL
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited) (In thousands, except
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Sales
$
6,568
$
3,691
$
12,391
$
7,088
Cost of sales
2,096
1,154
4,199
2,339
Gross profit
4,472
2,537
8,192
4,749
Other costs and expenses:
Research and development
888
763
1,698
1,277
Professional services
1,633
681
3,424
1,187
Salaries and related costs
3,333
1,813
6,554
3,615
Selling, general and administrative
3,083
2,213
6,184
4,323
Total other costs and expenses
8,937
5,470
17,860
10,402
Loss from operations
(4,465
)
(2,933
)
(9,668
)
(5,653
)
Interest income
403
—
826
—
Interest expense
—
(38
)
—
(72
)
Other losses
(200
)
—
(225
)
—
Fee associated with refinance
—
46
—
20
Total other income (expense),
net
203
8
601
(52
)
Loss before income taxes
(4,262
)
(2,925
)
(9,067
)
(5,705
)
Income tax (benefit) expense
76
13
(48
)
24
Income from continuing
operations
(4,338
)
(2,938
)
(9,019
)
(5,729
)
Income from discontinued operations, net
of tax
—
2,666
—
4,522
Net income (loss)
(4,338
)
(272
)
(9,019
)
(1,207
)
EPS from continuing operations:
Basic
$
(0.13
)
(0.09
)
$
(0.27
)
$
(0.17
)
Diluted
(0.13
)
(0.09
)
$
(0.27
)
$
(0.17
)
EPS from discontinued
operations:
Basic
—
0.08
—
0.13
Diluted
—
0.08
—
0.13
EPS from total operations:
Basic
$
(0.13
)
(0.01
)
$
(0.27
)
$
(0.04
)
Diluted
$
(0.13
)
(0.01
)
$
(0.27
)
$
(0.04
)
Weighted average number of shares
outstanding - basic
33,363
32,890
33,363
32,890
Weighted average number of shares
outstanding - dilutive
33,363
32,890
33,363
32,890
APYX MEDICAL
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited) (In thousands, except
share and per share data)
June 30, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
67,360
$
16,466
Short term investments
—
61,678
Trade accounts receivable, net of
allowance of $285 and $428
6,218
5,015
Inventories, net of provision for
obsolescence of $402 and $439
6,392
5,212
Prepaid expenses and other current
assets
1,987
1,146
Total current assets
81,957
89,517
Property and equipment, net
6,300
5,788
Intangibles
185
191
Deposits
73
73
Other assets
368
41
Total assets
$
88,883
$
95,610
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,641
$
1,423
Accrued expenses
5,848
5,552
Accrued severance and related
408
727
Total current liabilities
7,897
7,702
Note payable
140
140
Long term lease liability
267
—
Total liabilities
8,304
7,842
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000
shares authorized; 33,847,100 issued and 33,704,525 outstanding as
of December 31, 2018, and 34,061,360 issued and 33,918,785
outstanding as of June 30, 2019
34
34
Additional paid-in capital
54,051
52,221
Retained earnings
$
26,494
$
35,513
Total stockholders' equity
80,579
87,768
Total liabilities and stockholders'
equity
88,883
95,610
Use of Non-GAAP Financial Measures
We present these non-GAAP measures because we believe these
measures are useful indicators of our operating performance. Our
management uses these non-GAAP measures principally as a measure of
our operating performance and believes that these measures are
useful to investors because they are frequently used by analysts,
investors and other interested parties to evaluate companies in our
industry. We also believe that these measures are useful to our
management and investors as a measure of comparative operating
performance from period to period.
The Company has presented the following non-GAAP financial
measures in this press release: adjusted EBITDA. The Company
defines adjusted EBITDA as its reported net income/(loss) (GAAP)
plus income tax expense, interest, depreciation and amortization,
stock-compensation expense, and changes in value of derivative
liabilities.
APYX MEDICAL
CORPORATION
RECONCILIATION OF GAAP NET
INCOME/(LOSS) RESULTS TO NON-GAAP ADJUSTED EBITDA/(LOSS)
(Unaudited) (In thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net loss from continuing operations GAAP
Basis
$
(4,338
)
$
(2,938
)
$
(9,019
)
$
(5,729
)
Interest (income) expense, net
(403
)
38
(826
)
72
Income tax (benefit) expense
76
13
(48
)
24
Depreciation and amortization
122
171
316
371
Stock based compensation
856
377
1,715
749
Change in value of derivative
liabilities
—
(46
)
—
(20
)
Adjusted EBITDA
(3,687
)
(2,385
)
(7,862
)
(4,533
)
The following unaudited table presents a reconciliation of net
loss to Adjusted EBITDA for our 2019 guidance. The reconciliation
assumes the mid-point of the Adjusted EBITDA loss range and the
midpoint of each component of the reconciliation, corresponding to
guidance for GAAP net loss of $22.4 million to $21.4 million for
2019.
Year 2019
Net loss GAAP Basis
$
(21,900
)
Interest (income) expense, net
(1,100
)
Income tax (benefit) expense
—
Depreciation and amortization
700
Stock based compensation
4,000
Change in fair value of derivative
liabilities
—
Adjusted EBITDA
$
(18,300
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190807005740/en/
Investor Relations Contact:
Westwicke Partners on behalf of Apyx Medical Corporation Mike
Piccinino, CFA investor.relations@apyxmedical.com
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