Advanced Energy Sales of $6.1 million in Q3,
up 104% 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 third quarter ended September
30, 2019.
Third Quarter 2019 Financial
Summary:
- Total Q3 revenue from continuing operations of $7.6 million, up
106% year-over-year.
- Advanced Energy revenue of $6.1 million, up 104%
year-over-year.
- OEM revenue of $1.5 million, up 116% year-over-year.
- Total Q3 GAAP net loss from continuing operations of $4.3
million versus total GAAP net loss from continuing operations of
$0.4 million for the third quarter of 2018.
- Total Q3 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 October 14, 2019, the Company announced that it has
initiated subject enrollment in an FDA approved U.S.
Investigational Device Exemption clinical study evaluating the use
of its Renuvion technology in skin laxity procedures in the neck
and submental region.
- On October 14, 2019, the Company announced that it received
U.S. Food and Drug Administration 510(k) clearance to market and
sell the Apyx Plasma/RF Handpiece, a new addition to the Renuvion
product family.
Management Comments:
“Our performance during the third quarter was impressive and
represents a continuation of the better-than-expected growth and
profitability performance we have generated throughout 2019,” said
Charlie Goodwin, President and Chief Executive Officer. “I am
extremely proud of the organization’s ability to execute our
strategic growth objectives and the progress we made during the
third quarter is notable: we drove revenue growth of 106%
year-over-year, led by 104% growth in Advanced Energy sales, we
made advancements in both our clinical and regulatory strategies,
and we realized early benefits to our Advanced Energy gross margins
as a result of our focus on improving our manufacturing
efficiency.”
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 third quarter and our updated outlook for the rest of 2019. We
remain focused on continued execution towards our strategic growth
objectives: to increase our share of the $1.5 billion U.S. cosmetic
surgery market, to penetrate existing international markets and to
expand into new countries with strong demand from cosmetic surgeons
for our highly differentiated Renuvion technology. We will continue
to make targeted investments in order to deliver strong, sustained
growth and improving profitability in the years to come. 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.”
Third Quarter 2019
Results:
The following table represents revenue from continuing
operations by reportable segment:
Three Months Ended
September 30,
Increase/Decrease
Nine Months Ended
September 30,
Increase/Decrease
(In thousands)
2019
2018
$
Change
%
Change
2019
2018
$
Change
%
Change
Advanced Energy
$
6,094
$
2,985
$
3,109
104.2
%
$
15,734
$
8,727
$
7,007
80.3
%
OEM
1,481
687
794
115.6
%
4,038
2,033
2,005
98.6
%
Total
$
7,575
$
3,672
$
3,903
106.3
%
$
19,772
$
10,760
$
9,012
83.8
%
Total revenue from continuing operations for the three months
ended September 30, 2019, increased $3.9 million, or 106.3%, to
$7.6 million, compared to $3.7 million in the prior year. Sales of
the Company’s Advanced Energy generators and handpieces drove the
increase in total revenue in the third quarter of 2019, with OEM
segment sales contributing modestly to the year-over-year increase
in total revenue from continuing operations during the third
quarter 2019 period. Advanced Energy segment sales increased
approximately $3.1 million, or 104.2% year-over-year, to $6.1
million, compared to approximately $3.0 million last year, as a
result of additional sales force in the U.S. and new international
distributors. This increase in selling infrastructure has resulted
in increases of generator and handpiece sales, both domestically
and in international markets. OEM segment sales increased $0.8
million, or 115.6% year-over-year, to $1.5 million, compared to
$0.7 million last year, primarily attributable to sales to Symmetry
under our Manufacture and Supply Agreement.
Three Months Ended
September 30,
Increase/Decrease
Nine Months Ended
September 30,
Increase/Decrease
(In thousands)
2019
2018
$
Change
%
Change
2019
2018
$
Change
%
Change
Domestic
$
5,552
$
2,763
$
2,789
100.9
%
$
14,002
$
8,481
$
5,521
65.1
%
International
2,023
909
1,114
122.6
%
5,770
2,279
3,491
153.2
%
Total
$
7,575
$
3,672
$
3,903
106.3
%
$
19,772
$
10,760
$
9,012
83.8
%
For the third quarter 2019, revenue from continuing operations
in the United States increased $2.8 million, or 100.9%
year-over-year, to $5.6 million, and international revenue from
continuing operations increased $1.1 million, or 122.6%
year-over-year, to $2.0 million. International sales growth in the
third quarter was primarily driven by sales to international
distributors in the Company’s Advanced Energy segment.
Gross profit for the three months ended September 30, 2019,
increased approximately $2.5 million, or 99.0% year-over-year, to
$5.0 million, compared to $2.5 million in the prior year. Gross
margin for the three months ended September 30, 2019 was 66.2%,
compared to 68.7% for the same period. The primary drivers of the
decrease in gross profit margin were reallocations of overhead
expenses in Bulgaria for manufactured inventory, revenue related to
our new Product, Manufacturing, and Supply agreements with Symmetry
and increases in Advanced Energy sales outside of the U.S., which
have lower margins than U.S. sales and represented a higher mix of
total sales in three months ended September 30, 2019.
Operating expenses from continuing operations for the third
quarter of 2019 increased $4.4 million, or 82.7% year-over-year, to
$9.9 million, compared to $5.3 million for the third quarter of
2018. The year-over-year change in operating expenses from
continuing operations was primarily driven by a $0.9 million
increase in salaries and related costs, a $1.4 million increase in
professional services costs, a $1.8 million increase in selling,
general, and administrative expenses and a $0.3 million increase in
research and development expenses.
Net loss from continuing operations for third quarter 2019 was
$(4.3) million, or $(0.13) per diluted share, compared to a net
loss from continuing operations of $(0.4) million, or $(0.01) per
diluted share, for the third quarter of 2018. Total income from
discontinued operations, net of tax, was $69.6 million, or $1.99
per diluted share, in the third quarter of 2018.
As of September 30, 2019, the Company had cash and equivalents
of $62.3 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 $69.9 million as of
September 30, 2019 as compared to $81.9 million as of December 31,
2018.
First Nine Months of 2019
Results:
Total revenue for the nine months ended September 30, 2019
increased $9.0 million, or 83.8%, to $19.8 million, compared to
$10.8 million in the nine months ended September 30, 2018. Total
revenue growth was driven by a 80.3% increase in Advance Energy
sales and a 98.6% increase in OEM sales.
Net loss from continuing operations for the nine months
ended September 30, 2019 was $(13.9) million,
or $(0.41) per diluted share, compared to a loss from
continuing operations of $(6.2) million,
or $(0.19) per diluted share, for the nine months
ended September 30, 2018. Total income from discontinued
operations, net of tax, was $74.1 million, or $2.19 per diluted
share, in the nine months ended September 30, 2018.
2019 Financial Outlook:
The Company is updating its fiscal year 2019 financial
guidance:
- Total revenue in the range of $27.4 million to $27.9 million,
representing growth of 64% to 67% 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
$26.5 million to $27.5 million, representing growth of 59% to 65%
year-over-year.
- Total revenue guidance assumes:
- Advanced Energy revenue in the range of $22.2 million to $22.7
million, representing growth of 70% to 74% 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
$21.5 million to $22.5 million, representing growth of 65% to 72%
year-over-year.
- OEM revenue of $5.1 million, representing growth of 42%
year-over-year, compared to $3.6 million for fiscal year 2018. The
Company's prior guidance for OEM revenue was approximately $5.0
million, representing growth of 38% year-over-year.
- GAAP net loss in the range of $20.3 million to $219.8 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 $22.4 million to $21.4 million.
- Adjusted EBITDA loss in the range of $16.9 million to $16.4
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 $18.8 million to
$17.8 million.
Conference Call Details:
Management will host a conference call at 4:30 p.m. Eastern Time
on November 11 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 8858026.
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/2078394/6C570DF79EE266DC31CAEA936370C638
A telephonic replay will be available approximately two hours
after the end of the call through November 11, 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: 8858026. 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
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Sales
$
7,575
$
3,672
$
19,772
$
10,760
Cost of sales
2,558
1,151
6,757
3,490
Gross profit
5,017
2,521
13,015
7,270
Other costs and expenses:
Research and development
936
613
2,634
1,890
Professional services
1,996
628
5,756
1,815
Salaries and related costs
3,020
2,119
9,691
5,734
Selling, general and administrative
3,762
1,957
9,869
6,280
Total other costs and expenses
9,714
5,317
27,950
15,719
Loss from operations
(4,697
)
(2,796
)
(14,935
)
(8,449
)
Interest income
327
135
1,153
135
Interest expense
—
(30
)
—
(102
)
Other losses
230
(155
)
5
(155
)
Change in value of derivative liabilities
—
—
—
20
Total other income (expense),
net
557
(50
)
1,158
(102
)
Loss before income taxes
(4,140
)
(2,846
)
(13,777
)
(8,551
)
Income tax (benefit) expense
171
(2,408
)
123
(2,384
)
Income from continuing
operations
(4,311
)
(438
)
(13,900
)
(6,167
)
Income from discontinued operations, net
of tax
—
540
—
5,062
Gain on sale of Core Business, net of
tax
—
69,072
—
69,072
Total income from discontinued operations,
net of tax
—
69,612
—
74,134
Net income (loss)
$
(4,311
)
$
69,174
$
(13,900
)
$
67,967
EPS from continuing operations:
Basic and diluted
$
(0.13
)
$
(0.01
)
$
(0.41
)
$
(0.19
)
EPS from discontinued
operations:
Basic
$
—
$
2.09
$
—
$
2.25
Diluted
$
—
$
1.99
$
—
$
2.19
EPS from total operations:
Basic
$
(0.13
)
$
2.08
$
(0.41
)
$
2.06
Diluted
$
(0.13
)
$
1.98
$
(0.41
)
$
2.00
Weighted average number of shares
outstanding - basic
34,078
33,275
34,039
33,014
Weighted average number of shares
outstanding - dilutive
34,078
34,934
34,039
33,952
APYX MEDICAL
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited) (In thousands, except
share and per share data)
September 30,
2019
December 31,
2018
ASSETS
Current assets:
Cash and cash equivalents
$
62,272
$
16,466
Short term investments
—
61,678
Trade accounts receivable, net of
allowance of $354 and $428
7,662
5,015
Inventories, net of provision for
obsolescence of $439 and $439
7,237
5,212
Prepaid expenses and other current
assets
1,734
1,146
Total current assets
78,905
89,517
Property and equipment, net
6,645
5,788
Operating lease right-of-use assets
368
—
Finance lease right-of-use assets
638
—
Other assets
387
305
Total assets
$
86,943
$
95,610
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,457
$
1,423
Accrued expenses and other liabilities
7,285
6,162
Current portion of operating lease
liabilities
101
—
Current portion of finance lease
liabilities
196
—
Total current liabilities
9,039
7,585
Note payable
140
140
Long-term operating lease liabilities
248
—
Long-term finance lease liabilities
444
—
Contract liabilities
339
—
Total liabilities
10,210
7,725
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000
shares authorized; 34,120,065 issued and 33,977,490 outstanding as
of September 30, 2019, and 33,847,100 issued and 33,704,525
outstanding as of December 31, 2018
34
34
Additional paid-in capital
55,668
52,920
Retained earnings
21,031
34,931
Total stockholders' equity
76,733
87,885
Total liabilities and stockholders'
equity
$
86,943
$
95,610
APYX MEDICAL
CORPORATION
RECONCILIATION OF GAAP NET
INCOME/(LOSS) RESULTS TO NON-GAAP ADJUSTED EBITDA/(LOSS)
(Unaudited) (In thousands)
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.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Net loss from continuing operations GAAP
Basis
$
(4,311
)
$
(438
)
$
(13,900
)
$
(6,167
)
Interest income, net
(327
)
(105
)
(1,153
)
(33
)
Income tax (benefit) expense
171
(2,408
)
123
(2,384
)
Depreciation and amortization
194
58
510
429
Stock based compensation
543
489
2,594
1,238
Change in value of derivative
liabilities
—
—
—
(20
)
Adjusted EBITDA
(3,730
)
(2,404
)
(11,826
)
(6,937
)
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 $20.3 million to $19.8 million for
2019.
Year 2019
Net loss GAAP Basis
$
(20,050
)
Interest income, net
(1,300
)
Income tax (benefit) expense
200
Depreciation and amortization
700
Stock based compensation
3,800
Change in fair value of derivative
liabilities
—
Adjusted EBITDA
$
(16,650
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191111005647/en/
Investor Relations Contact:
Westwicke Partners on behalf of Apyx Medical Corporation Mike
Piccinino, CFA investor.relations@apyxmedical.com
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