Conformis Reports Second Quarter 2021 Financial Results
August 04 2021 - 4:05PM
Conformis, Inc. (NASDAQ:CFMS), an orthopedic medical device company
that features personalized knee and hip replacement products,
announced today financial results for the second quarter ended
June 30, 2021.
Second Quarter 2021 Summary
- Total revenue of $56.3 million, an increase of 189%
year-over-year on a reported and constant currency basis.
- Product revenue of $15.2 million, an increase of 56%
year-over-year on a reported basis and 54% on a constant currency
basis.
- Royalty and licensing revenue of $41.1 million, including $25.0
million in connection with the third and final milestone under the
Stryker development and license agreements and the settlement and
license agreement with Stryker, Wright Medical, and Tornier.
- Conformis Hip System revenue up 62% year-over-year to $0.9
million.
- Received 510(k) clearance for Identity Imprint™ Knee
Replacement System.
- Received 510(k) clearance for patient-specific instrumentation
developed in connection with the Stryker license and development
agreements. First procedure successfully completed on July 14,
2021.
- Full forgiveness of Paycheck Protection Program (“PPP”) loan of
$4.7 million principal loan amount, plus accrued interest.
Executive Commentary – Mark Augusti, President and
CEO
“We had another steady quarter of progress as we executed our
growth strategy. The environment for orthopedic surgical procedures
has improved and we believe procedure levels will continue to
normalize. We remain cautiously optimistic about the second half of
the year as we aim to get back to our 2019 revenue run rate.
We continue to make progress with our new product development
plans. As part of a limited market release, the first surgery using
our patient-specific instrumentation with a Stryker knee implant
recently occurred and was successful. We also obtained 510(k)
clearance from the FDA for our new Imprint knee offering, and we
expect our first surgeries to occur soon. We believe that these two
new products position us well as medical facilities, particularly
ambulatory surgical centers, continue returning to normal
operations and look for efficient, cost-effective knee implant
solutions.
We are also pleased that we have been able to continue
protecting and monetizing our intellectual property. This quarter,
we generated $41 million in royalties and license revenue. This
adds to an increasingly strong balance sheet that gives us the
runway to execute our plan.”
|
Three months ended June 30, |
Increase/(decrease) |
($, in
thousands) |
2021 |
2020 |
$ Change |
% Change |
% Change |
|
|
|
|
(as reported) |
(constant currency) |
United States |
$ |
13,424 |
|
$ |
8,331 |
|
$ |
5,093 |
|
61 |
% |
61 |
% |
Rest of world |
1,775 |
|
1,412 |
|
363 |
|
26 |
% |
14 |
% |
Product
revenue |
15,199 |
|
9,743 |
|
5,456 |
|
56 |
% |
54 |
% |
Royalty
revenue |
41,149 |
|
9,725 |
|
31,424 |
|
323 |
% |
323 |
% |
Total
revenue |
$ |
56,348 |
|
$ |
19,468 |
|
$ |
36,880 |
|
189 |
% |
189 |
% |
Second Quarter 2021 Highlights
Revenue
- Increase in revenue year-over-year was driven primarily by
increased elective procedure volumes, and an increase in royalty
and licensing revenue related to patent license settlement and
development agreements.
- Conformis Hip System revenue of $0.9 million for the second
quarter of 2021 was up 62% year-over-year and increased 38% from
the first quarter of 2021.
- Product Revenue compared to the second quarter of 2019 was down
21%, a sequential improvement from the 33% decline in the first
quarter.
Gross Margin
- Total gross profit increased $36.5 million to $47.5 million, or
84% of revenue, in the second quarter of 2021, compared to $11.0
million, or 57% of revenue, in the second quarter of 2020.
- The 2,780 basis-point increase in gross margin year-over-year
was driven primarily by the increase in royalty and licensing
revenue associated with the Stryker development and license
agreements and the settlement and license agreement with Stryker,
Wright Medical, and Tornier.
- Product gross margin of 42% increased by 1,180 basis points as
compared to the second quarter of 2020 driven primarily by lower
cancelled case inventory expense and lower manufacturing variances
as a result of increased production volumes.
Operating Expenses
- Total operating expenses of $16.6 million, an increase of 25%
year-over-year.
- Sales and marketing expenses increased $2.2 million primarily
due to higher sales commissions, travel expenses, marketing
programs, and training events.
- Research and development expenses increased $0.9 million
primarily driven by personnel and project related costs to support
our new product pipeline.
- General and administrative expenses increased $0.2 million
primarily driven by higher professional fees related to the
protection of our intellectual property.
Net Income
- Net income was $38.0 million, or $0.21 per basic and diluted
share, in the second quarter of 2021, compared to a net loss of
$2.1 million, or $0.03 per basic and diluted share, in the same
period last year.
- Several non-recurring items drove net income this quarter
including royalty and licensing revenue, forgiveness of the PPP
loan plus accrued interest of $4.8 million, and $2.5 million for
the unused portion of the advance on research and development under
the development agreement with Stryker. The last two items are
included in other income.
- Foreign currency exchange income was $0.5 million in the second
quarter of 2021, compared to $0.7 million in the same period last
year.
- Weighted average basic and diluted shares outstanding of 177.7
million and 180.0 million respectively, for the second quarter of
2021, compared to 68.2 million for both weighted average basic and
diluted shares outstanding for the same period last year.
Capital Structure and Liquidity
- Cash and cash equivalents totaled $108.3 million as of
June 30, 2021, compared to $28.7 million as of
December 31, 2020.
- $4.7 million PPP loan forgiven in full. Loan proceeds were used
to maintain our staffing through the pandemic.
Outlook
- We expect our third quarter product revenue to improve
sequentially from the second quarter and to be in the range of
$15.5 million to $16.5 million.
- We believe elective procedure volumes will continue to improve
and approach 2019 levels in the fourth quarter as vaccines become
more widely available and medical facilities recover from
pandemic-related staffing impacts.
Note on Non-GAAP Financial
Measures
In addition to disclosing financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), the Company provides certain information regarding the
Company's financial results or projected financial results on a
non-GAAP "constant currency basis." This information estimates the
impact of changes in foreign currency rates on the translation of
the Company's current or projected future period financial results
as compared to the applicable comparable period. This impact is
derived by taking the adjusted current or projected local currency
results and translating them into U.S. dollars based upon the
foreign currency exchange rates for the applicable comparable
period. It does not include any other effect of changes in foreign
currency rates on the Company's results or business. Non-GAAP
information is not a substitute for, and is not superior to,
information presented on a GAAP basis. Company management uses
these non-GAAP measures internally to measure operational
performance.
Webcast
As previously announced, Conformis will conduct a webcast today
at 4:30 PM Eastern Time. Management will discuss financial results
and strategic matters. The webcast will be live at
https://edge.media-server.com/mmc/p/djinyqx6.
The online archive of the webcast will be available on the
Company's website for 30 days.
About Conformis, Inc.
Conformis is a medical technology company that uses its
proprietary iFit® Image-to-Implant® technology platform to develop,
manufacture, and sell joint replacement implants and instruments
that are individually sized and shaped, which we refer to as
personalized, individualized, or sometimes as customized, to fit
each patient's unique anatomy. Conformis offers a broad line
of sterile, personalized knee and hip implants and single-use
instruments delivered to hospitals and ambulatory surgical
centers. In clinical studies, the Conformis iTotal CR knee
replacement system demonstrated superior clinical outcomes,
including better function and greater patient satisfaction,
compared to traditional, off-the-shelf implants. Conformis owns or
exclusively in-licenses issued patents and pending patent
applications that cover personalized implants and patient-specific
instrumentation for all major joints.
For more information, visit www.conformis.com. To receive
future releases in e-mail alerts, sign up at ir.conformis.com.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this press release about our future expectations,
plans and prospects, including statements about the impact of the
novel coronavirus (COVID-19) pandemic, the anticipated timing of
our product launches, whether or when restrictions on elective
surgeries will be relaxed and demand for procedures will increase,
and our financial position and results, total revenue, product
revenue, gross margin, operations and growth, as well as other
statements containing the words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may,"
"might," "plan," "potential," "predict," "project," "should,"
"target," "will," or "would" or the negative of these terms or
other and similar expressions are intended to identify
forward-looking statements within the meaning of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995,
although not all forward-looking statements contain these
identifying words. We may not actually achieve the plans,
intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Actual results or events could differ
materially from the plans, intentions and expectations disclosed in
the forward-looking statements we make as a result of a variety of
risks and uncertainties, including risks related to the novel
coronavirus pandemic and the response to the pandemic; whether our
cash resources will be sufficient to fund our continuing operations
for the periods anticipated; risks related to our estimates and
expectations regarding our revenue, gross margin, expenses, revenue
growth and other results of operations, and the other risks and
uncertainties described in the "Risk Factors" sections of our
Annual Report on Form 10-K for the fiscal year ended December 31,
2020 and other public filings with the U.S. Securities and Exchange
Commission. In addition, the forward-looking statements included in
this press release represent our views as of the date hereof. We
anticipate that subsequent events and developments may cause our
views to change. However, while we may elect to update these
forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date
hereof.
CONFORMIS, INC. AND SUBSIDIARIES |
Consolidated Statements of Operations |
(unaudited) |
(in thousands, except share and per share
data) |
|
|
Three Months Ended June 30, |
|
2021 |
|
2020 |
|
|
|
|
Revenue |
|
|
|
Product |
$ |
15,199 |
|
|
|
$ |
9,743 |
|
|
Royalty and licensing |
41,149 |
|
|
|
9,725 |
|
|
Total revenue |
56,348 |
|
|
|
19,468 |
|
|
Cost of revenue |
8,810 |
|
|
|
8,450 |
|
|
Gross profit |
47,538 |
|
|
|
11,018 |
|
|
|
|
|
|
Operating expenses |
|
|
|
Sales and marketing |
6,304 |
|
|
|
4,102 |
|
|
Research and development |
3,650 |
|
|
|
2,738 |
|
|
General and administrative |
6,689 |
|
|
|
6,474 |
|
|
Total operating expenses |
16,643 |
|
|
|
13,314 |
|
|
Income (loss) from
operations |
30,895 |
|
|
|
(2,296 |
) |
|
|
|
|
|
Other income and expenses |
|
|
|
Interest income |
39 |
|
|
|
23 |
|
|
Interest expense |
(607 |
) |
|
|
(584 |
) |
|
Other income |
7,252 |
|
|
|
— |
|
|
Foreign currency exchange transaction income |
455 |
|
|
|
694 |
|
|
Total other income |
7,139 |
|
|
|
133 |
|
|
Income (loss) before income
taxes |
38,034 |
|
|
|
(2,163 |
) |
|
Income tax provision |
(8 |
) |
|
|
(28 |
) |
|
|
|
|
|
Net income (loss) |
$ |
38,042 |
|
|
|
$ |
(2,135 |
) |
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
Basic |
$ |
0.21 |
|
|
|
$ |
(0.03 |
) |
|
Diluted |
$ |
0.21 |
|
|
|
$ |
(0.03 |
) |
|
Weighted average common shares
outstanding: |
|
|
|
Basic |
177,668,627 |
|
|
|
68,187,128 |
|
|
Diluted |
180,015,105 |
|
|
|
68,187,128 |
|
|
CONFORMIS, INC. AND SUBSIDIARIES |
Consolidated Balance Sheets |
(in thousands, except share and per share
data) |
|
|
|
|
|
June 30, 2021 |
|
December 31, 2020 |
Assets |
(unaudited) |
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
108,320 |
|
|
|
$ |
28,673 |
|
|
Accounts receivable, net |
8,903 |
|
|
|
8,515 |
|
|
Royalty and licensing receivable |
15,643 |
|
|
|
1,256 |
|
|
Inventories, net |
13,421 |
|
|
|
12,585 |
|
|
Prepaid expenses and other current assets |
2,314 |
|
|
|
2,315 |
|
|
Total current assets |
148,601 |
|
|
|
53,344 |
|
|
Property and equipment, net |
11,108 |
|
|
|
12,240 |
|
|
Operating lease right-of-use assets |
8,268 |
|
|
|
5,215 |
|
|
Other Assets |
|
|
|
Restricted cash |
562 |
|
|
|
462 |
|
|
Other long-term assets |
218 |
|
|
|
239 |
|
|
Total assets |
$ |
168,757 |
|
|
|
$ |
71,500 |
|
|
|
|
|
|
Liabilities and stockholder's
equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
4,957 |
|
|
|
$ |
4,918 |
|
|
Accrued expenses |
8,550 |
|
|
|
7,213 |
|
|
Operating lease liabilities |
1,782 |
|
|
|
1,620 |
|
|
Advance on research and development |
— |
|
|
|
3,168 |
|
|
Contract liability |
— |
|
|
|
14,000 |
|
|
Total current liabilities |
15,289 |
|
|
|
30,919 |
|
|
Long-term debt, less debt issuance costs |
20,627 |
|
|
|
25,003 |
|
|
Operating lease liabilities |
7,112 |
|
|
|
4,206 |
|
|
Total liabilities |
43,028 |
|
|
|
60,128 |
|
|
Commitments and
contingencies |
|
|
|
Stockholders' equity |
|
|
|
Preferred stock, $0.00001 par value: |
|
|
|
Authorized: 5,000,000 shares authorized at June 30, 2021 and
December 31, 2020; no shares issued and outstanding as of June 30,
2021 and December 31, 2020 |
— |
|
|
|
— |
|
|
Common stock, $0.00001 par value: |
|
|
|
Authorized: 300,000,000 shares authorized at June 30, 2021 and
December 31, 2020; 186,053,533 and 95,546,577 shares issued and
outstanding at June 30, 2021 and December 31, 2020,
respectively |
2 |
|
|
|
1 |
|
|
Additional paid-in
capital |
630,435 |
|
|
|
543,809 |
|
|
Accumulated deficit |
(501,902 |
) |
|
|
(528,438 |
) |
|
Accumulated other
comprehensive loss |
(2,806 |
) |
|
|
(4,000 |
) |
|
Total stockholders' equity |
125,729 |
|
|
|
11,372 |
|
|
Total liabilities and stockholders' equity |
$ |
168,757 |
|
|
|
$ |
71,500 |
|
|
CONTACT:
Investor Relations
ir@conformis.com
(781) 374-5598
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