Nuvectra™ Reports Second Quarter 2017 Financial Results
August 08 2017 - 4:01PM
Nuvectra Corporation (NASDAQ:NVTR), a neurostimulation medical
device company, today announced financial results for the second
quarter ended June 30, 2017.
Highlights
- Record consolidated revenues of $7.2 million, including total
Algovita® sales of $5.5 million
- Completed FDA regulatory submission for full-body
MRI-conditional approval for the Algovita SCS system
- On track with the Virtis™ U.S. and European regulatory approval
timelines
Scott Drees, CEO, said, “During the second
quarter our U.S. commercial organization, which includes
approximately 50 active territories, continued to increase Algovita
penetration into more hospitals, ambulatory surgery centers and
physician offices that provide SCS therapy. This contributed to
record Algovita revenue, up 62% sequentially, demonstrating our
team’s growing momentum in the SCS market. We also completed our
FDA regulatory submission for full-body MRI-conditional approval
for the Algovita SCS system. Finally, we remain on track with our
FDA and CE mark timelines for the Virtis Sacral Neuromodulation
System.”
Second Quarter Financial Results
Total revenue in the second quarter of 2017 was
$7.2 million, a 183% increase from $2.6 million in the second
quarter of 2016. Gross profit in the second quarter of 2017 was
$3.7 million, or 51.0% gross margin, an increase from $1.3 million,
or 50.5% gross margin, in the second quarter of 2016.
Operating expenses in the second quarter of 2017
were $14.4 million, a 51% increase from $9.5 million in the second
quarter of 2016. The increase primarily reflects investments in
scaling the Company’s sales and marketing team and corporate
infrastructure.
Net loss for the second quarter of 2017 was
$(11.2) million or $(1.07) per share, compared with a net loss of
$(8.8) million, or $(0.85) per share, for the second quarter of
2016.
Total cash and cash equivalents were $34.4
million as of June 30, 2017.
Conference Call Information
Nuvectra will hold a conference call on Tuesday,
August 8, 2017 at 4:30pm ET to discuss the results. The dial in
numbers are (844) 882-7830 for domestic callers and (574) 990-9704
for international callers. The conference ID is 58530044. A
live webcast of the conference call will be available on the
investor relations section of the Company’s website at
http://investors.nuvectramed.com/.
A replay of the call will be available starting
on August 8, 2017 through August 15, 2017. To access the replay,
dial (855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 58530044. The webcast
will be available in the investor relations section of the
Company’s website for 90 days following the completion of the
call.
About Nuvectra Corporation
NuvectraTM is a neurostimulation company
committed to helping physicians improve the lives of people with
chronic neurological conditions. The Algovita® Spinal Cord
Stimulation (SCS) System is our first commercial offering and is CE
marked and FDA approved for the treatment of chronic intractable
pain of the trunk and/or limbs. Our innovative technology platform
also has capabilities under development to support other
indications such as sacral neuromodulation (SNM) for the treatment
of overactive bladder, and deep brain stimulation (DBS) for the
treatment of Parkinson’s Disease. In addition, our NeuroNexus
subsidiary designs, manufactures and markets leading-edge
neural-interface technologies for the neuroscience clinical
research market. Visit the Nuvectra website at
www.nuvectramed.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains "forward-looking
statements," including statements we make regarding the outlook
for Nuvectra as an independent publicly-traded company.
Forward-looking statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions, and therefore they
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and may be outside of
our control. Our actual performance may differ materially from
those indicated in the forward-looking statements. Therefore, you
should not rely on any of these forward-looking statements. Any
forward-looking statement made by us is based only on information
currently available to us and speaks only as of the date on which
it is made. Important factors that could cause our actual
results to differ materially from those indicated in the
forward-looking statements include: (i) our ability to successfully
commercialize Algovita and to develop, complete and commercialize
enhancements or improvements to Algovita; (ii) our ability to
successfully compete with our current SCS competitors and the
ability of our U.S. sales representatives to successfully establish
market share and acceptance of Algovita, (iii) the uncertainty of
obtaining regulatory approvals in the United States and Europe for
our Virtis SNM system, (iv) our ability to successfully launch and
commercialize the Virtis SNM system if it receives regulatory
approval (v) our ability to demonstrate the features, perceived
benefits and capabilities of Algovita to physicians and patients in
competition with similar products already well established and sold
in the SCS market; (vi) our ability to anticipate and satisfy
customer needs and preferences and to develop, introduce and
commercialize new products or advancements and improvements to
Algovita in order to successfully meet our customers’ expectations;
(vii) the outcome of our development plans for our neurostimulation
technology platform, including our ability to identify additional
indications or conditions for which we may develop neurostimulation
medical devices or therapies and seek regulatory approval thereof;
(viii) our ability to identify business development and growth
opportunities and to successfully execute on our strategy,
including our ability to seek and develop strategic partnerships
with third parties to, among other things, fund clinical and
development costs for new product offerings; (ix) the performance
by our development partners, including Aleva
Neurotherapeutics, S.A., of their obligations under their
agreements with us; (x) the scope of protection for our
intellectual property rights covering Algovita and other products
using our neurostimulation technology platform, along with any
product enhancements or improvements; (xi) our ability to
successfully build, attract and maintain an effective commercial
infrastructure and qualified sales force in the United States;
(xii) our compliance with all regulatory and legal requirements
regarding implantable medical devices and interactions with
healthcare professionals; (xiii) any product recalls, or the
receipt of any warning letters, mandatory corrections or fines from
any governmental or regulatory agency; (xiv) our ability to satisfy
the conditions and covenants, including trailing six month revenue
milestones, of our Credit Facility; and (xv) our ability to raise
capital through means other than or in addition to the Credit
Facility should it become necessary to do so, through a public
offering of our common stock, private equity or debt financings,
strategic partnerships, or other sources. Please see the section
entitled “Risk Factors” in Nuvectra’s Annual Report on Form 10-K
and in our other quarterly and periodic filings for a description
of these and other risks and uncertainties. We undertake no
obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
NUVECTRA CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS—Unaudited |
(in thousands except share and per share
data) |
|
|
|
|
|
|
As of |
|
|
|
June 30, 2017 |
|
|
December 30,2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
34,424 |
|
|
$ |
63,710 |
|
Trade
accounts receivable, net of allowance for doubtful accounts of $225
in fiscal 2017 and $10 in fiscal 2016 |
|
|
5,026 |
|
|
|
3,177 |
|
Inventories |
|
|
3,542 |
|
|
|
5,233 |
|
Prepaid
expenses and other current assets |
|
|
1,136 |
|
|
|
443 |
|
Total
current assets |
|
|
44,128 |
|
|
|
72,563 |
|
Property, plant and
equipment, net |
|
|
6,338 |
|
|
|
6,317 |
|
Intangible assets,
net |
|
|
1,570 |
|
|
|
1,714 |
|
Goodwill |
|
|
38,182 |
|
|
|
38,182 |
|
Other long-term
assets |
|
|
526 |
|
|
|
526 |
|
Total
assets |
|
$ |
90,744 |
|
|
$ |
119,302 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
3,285 |
|
|
$ |
9,928 |
|
Accrued
liabilities |
|
|
2,853 |
|
|
|
3,355 |
|
Accrued
compensation |
|
|
3,977 |
|
|
|
2,757 |
|
Short-term debt |
|
|
1,500 |
|
|
|
— |
|
Total
current liabilities |
|
|
11,615 |
|
|
|
16,040 |
|
Other long-term
liabilities |
|
|
1,209 |
|
|
|
940 |
|
Long-term debt,
net |
|
|
12,529 |
|
|
|
13,744 |
|
Total
liabilities |
|
|
25,353 |
|
|
|
30,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 10,489,091
and 10,319,627 shares issued and outstanding in fiscal 2017 and
fiscal 2016, respectively |
|
|
10 |
|
|
|
10 |
|
Additional paid-in capital |
|
|
122,977 |
|
|
|
121,806 |
|
Accumulated other comprehensive loss |
|
|
— |
|
|
|
(2 |
) |
Accumulated deficit |
|
|
(57,596 |
) |
|
|
(33,236 |
) |
Total
stockholders’ equity |
|
|
65,391 |
|
|
|
88,578 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
90,744 |
|
|
$ |
119,302 |
|
|
|
|
|
|
|
|
|
|
NUVECTRA CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
AND COMPREHENSIVE LOSS — Unaudited |
(in thousands except per share data) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2017 |
|
July 1, 2016 |
|
June 30, 2017 |
|
July 1, 2016 |
Sales: |
|
|
|
|
|
|
|
|
Product |
|
$ |
6,665 |
|
|
$ |
1,890 |
|
|
$ |
11,253 |
|
|
$ |
3,441 |
|
Service |
|
|
558 |
|
|
|
664 |
|
|
|
1,010 |
|
|
|
1,175 |
|
Total
sales |
|
|
7,223 |
|
|
|
2,554 |
|
|
|
12,263 |
|
|
|
4,616 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
Product |
|
|
3,273 |
|
|
|
927 |
|
|
|
5,374 |
|
|
|
1,728 |
|
Service |
|
|
266 |
|
|
|
336 |
|
|
|
576 |
|
|
|
590 |
|
Total
cost of sales |
|
|
3,539 |
|
|
|
1,263 |
|
|
|
5,950 |
|
|
|
2,318 |
|
Gross
profit |
|
|
3,684 |
|
|
|
1,291 |
|
|
|
6,313 |
|
|
|
2,298 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
11,186 |
|
|
|
6,094 |
|
|
|
21,991 |
|
|
|
10,179 |
|
Research,
development and engineering costs, net |
|
|
3,221 |
|
|
|
3,447 |
|
|
|
7,594 |
|
|
|
6,983 |
|
Other
operating expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
469 |
|
Total
operating expenses |
|
|
14,407 |
|
|
|
9,541 |
|
|
|
29,585 |
|
|
|
17,631 |
|
Operating
loss |
|
|
(10,723 |
) |
|
|
(8,250 |
) |
|
|
(23,272 |
) |
|
|
(15,333 |
) |
Interest expense,
net |
|
|
398 |
|
|
|
464 |
|
|
|
768 |
|
|
|
523 |
|
Other expense, net |
|
|
117 |
|
|
|
47 |
|
|
|
320 |
|
|
|
47 |
|
Loss
before provision for income taxes |
|
|
(11,238 |
) |
|
|
(8,761 |
) |
|
|
(24,360 |
) |
|
|
(15,903 |
) |
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net
loss |
|
$ |
(11,238 |
) |
|
$ |
(8,761 |
) |
|
$ |
(24,360 |
) |
|
$ |
(15,903 |
) |
|
|
|
|
|
|
|
|
|
Other comprehensive
gain: |
|
|
|
|
|
|
|
|
Unrealized holding gain on investments arising during
period |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Other comprehensive
gain |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Comprehensive loss |
|
$ |
(11,236 |
) |
|
$ |
(8,761 |
) |
|
$ |
(24,358 |
) |
|
$ |
(15,903 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share |
|
$ |
(1.07 |
) |
|
$ |
(0.85 |
) |
|
$ |
(2.34 |
) |
|
$ |
(1.55 |
) |
Basic and diluted
weighted average shares outstanding |
|
|
10,458 |
|
|
|
10,266 |
|
|
|
10,396 |
|
|
|
10,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contacts:
Nuvectra Corporation
Walter Berger, COO & CFO
(214) 474-3102
wberger@nuvectramed.com
Jennifer Armstrong, Media Relations
(214) 474-3110
jarmstrong@nuvectramed.com
Investor Contacts:
The Ruth Group
Zack Kubow
(646) 536-7020
zkubow@theruthgroup.com
Brian Johnston
(646) 536-7028
bjohnston@theruthgroup.com
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