Nuvectra Corporation (NASDAQ:NVTR), a neurostimulation medical
device company, today announced financial results for the fourth
quarter and full year ended December 31, 2017.
Recent Company Highlights
- Reported record consolidated revenues of $12.0 million for the
fourth quarter 2017 and $31.8 million for the full year 2017.
- Achieved the 1,000th Algovita® SCS System implantation in U.S.
in December 2017.
- Completed follow-on public offering of common stock for gross
proceeds of approximately $26.0 million in February 2018.
- Completed second amendment to the Company’s existing loan and
security agreement and drew down second tranche for $12.5 million
in February 2018.
Scott Drees, CEO, said, “In 2017, our first full commercial
year, we demonstrated our ability to compete in the SCS market,
delivering over $10 million in Q4 Algovita revenue. As we move into
2018, we expect to continue growing our SCS market share by
demonstrating the clinical benefits of our Algovita system through
clinical studies, obtaining MRI approvals, and building physician
awareness of the benefits of the Algovita system. We also
anticipate CE mark approval in the second quarter of 2018 of the
Virtis sacral neuromodulation system (SNM), and are on track for
FDA approval, with the expectation of a commercial launch in the
United States in the second half of 2018.”
Fourth Quarter and Full Year 2017 Financial
Results
Total revenue in the fourth quarter of 2017 was $12.0 million, a
188% increase from $4.2 million in the fourth quarter of 2016.
Total revenue for the full year 2017 was $31.8 million, a 154%
increase from $12.5 million for the full year 2016. Total Algovita
revenue in the fourth quarter of 2017 was $10.4 million, a 416%
increase from $2.0 million in the fourth quarter of 2016. Total
Algovita revenue for the full year 2017 was $25.6 million, a 514%
increase from $4.2 million for the full year 2016. Gross profit in
the fourth quarter of 2017 was $6.2 million, or 52% gross margin,
an increase from $1.7 million, or 40% gross margin, in the fourth
quarter of 2016. Total gross profit for the full year 2017 was
$16.0 million, or 50% gross margin, an increase from $6.1 million,
or 49% gross margin, for the full year 2016.
Operating expenses in the fourth quarter of 2017
were $13.9 million, a 6% decrease from $14.7 million in the fourth
quarter of 2016. Total operating expenses for the full year 2017
were $58.0 million, an increase of 33% from $43.5 million for the
full year 2016. The increase for the full year 2017 compared to the
full year 2016 reflects investments in the Company’s sales and
marketing team, along with higher headcount and other costs related
to becoming a public company.
Net loss for the fourth quarter of 2017 was
$(8.6) million or $(0.80) per share, compared with a net loss of
$(13.1) million, or $(1.27) per share, for the fourth quarter of
2016. Net loss for the full year 2017 was $(44.6) million or
$(4.22) per share, compared to $(38.4) million or $(3.74) per share
for the full year 2016.
Total cash and cash equivalents were $28.2
million as of December 31, 2017. Cash and cash equivalents as of
December 31, 2017 do not include total net proceeds of
approximately $23.8 million from the Company’s follow-on common
stock offering completed in February 2018, nor the cash proceeds
from the draw down of $12.5 million from the Company’s credit
facility in the same month.
Conference Call Information
Nuvectra will hold a conference call today,
Tuesday, March 6, 2018, 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
1785806. 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 March 6, 2018 through March 13, 2018. To access the replay, dial
(855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 1785806. 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 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 supplier shortages related to
Algovita or its components and any manufacturing disruptions which
may impact our inventory supply as we expand our business, (xiv)
any product recalls, or the receipt of any warning letters,
mandatory corrections or fines from any governmental or regulatory
agency; (xv) our ability to satisfy the conditions and covenants,
including trailing six month revenue milestones, of our Credit
Facility; and (xvi) 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 CORPORATIONCONSOLIDATED
STATEMENTS OF OPERATIONSAND COMPREHENSIVE
LOSS(in thousands, except per share
data) |
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, 2017 |
December 30, 2016 |
|
December 31, 2017 |
December 30, 2016 |
Sales: |
|
|
|
|
|
Product |
|
11,639 |
|
|
3,270 |
|
|
|
30,323 |
|
|
9,314 |
|
Service |
|
317 |
|
|
883 |
|
|
|
1,513 |
|
|
3,221 |
|
Total
sales |
|
11,956 |
|
|
4,153 |
|
|
|
31,836 |
|
|
12,535 |
|
Cost of Sales: |
|
|
|
|
|
Product |
|
5,596 |
|
|
1,934 |
|
|
|
14,989 |
|
|
4,806 |
|
Service |
|
189 |
|
|
550 |
|
|
|
897 |
|
|
1,624 |
|
Total
cost of sales |
|
5,785 |
|
|
2,484 |
|
|
|
15,886 |
|
|
6,430 |
|
Gross
profit |
|
6,171 |
|
|
1,669 |
|
|
|
15,950 |
|
|
6,105 |
|
Operating
expenses: |
|
|
|
|
|
Selling,
general and administrative expenses |
|
10,511 |
|
|
10,322 |
|
|
|
43,860 |
|
|
28,507 |
|
Research,
development and engineering costs, net |
|
3,372 |
|
|
4,427 |
|
|
|
14,102 |
|
|
14,524 |
|
Other
operating expenses |
|
- |
|
|
- |
|
|
|
- |
|
|
476 |
|
Total
operating expenses |
|
13,883 |
|
|
14,749 |
|
|
|
57,962 |
|
|
43,507 |
|
Operating
loss |
|
(7,712) |
|
|
(13,080) |
|
|
|
(42,012) |
|
|
(37,402) |
|
Interest expense,
net |
|
769 |
|
|
390 |
|
|
|
1,959 |
|
|
1,311 |
|
Other expense (income),
net |
|
105 |
|
|
(395) |
|
|
|
604 |
|
|
(285) |
|
Loss
before provision for income taxes |
|
(8,586) |
|
|
(13,075) |
|
|
|
(44,575) |
|
|
(38,428) |
|
Provision for income
taxes |
|
16 |
|
|
- |
|
|
|
25 |
|
|
- |
|
Net
loss |
$ |
(8,602) |
|
$ |
(13,075) |
|
|
$ |
(44,600) |
|
$ |
(38,428) |
|
Comprehensive loss |
$ |
(8,603) |
|
$ |
(13,077) |
|
|
$ |
(44,599) |
|
$ |
(38,430) |
|
Basic and diluted net
loss per share |
$ |
(0.80) |
|
$ |
(1.27) |
|
|
$ |
(4.22) |
|
$ |
(3.74) |
|
Basic and diluted
weighted average shares outstanding |
|
10,813 |
|
|
10,305 |
|
|
|
10,576 |
|
|
10,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUVECTRA
CORPORATIONCONSOLIDATED BALANCE
SHEETS(in thousands, except share and per share
data) |
|
|
|
|
As of |
|
|
December 31,2017 |
|
December 30,2016 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
28,165 |
|
$ |
63,710 |
|
Trade
accounts receivable, net of allowance for doubtful accounts of $417
in fiscal 2017 and $10 in fiscal 2016 |
|
|
10,875 |
|
|
3,177 |
|
Inventories |
|
|
4,978 |
|
|
5,233 |
|
Prepaid
expenses and other current assets |
|
|
1,011 |
|
|
443 |
|
Total
current assets |
|
|
45,029 |
|
|
72,563 |
|
Property, plant and
equipment, net |
|
|
6,219 |
|
|
6,317 |
|
Intangible assets,
net |
|
|
1,428 |
|
|
1,714 |
|
Goodwill |
|
|
38,182 |
|
|
38,182 |
|
Other long-term
assets |
|
|
245 |
|
|
526 |
|
Total
assets |
|
$ |
91,103 |
|
$ |
119,302 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
2,043 |
|
$ |
9,928 |
|
Accrued
liabilities |
|
|
8,827 |
|
|
3,355 |
|
Accrued
compensation |
|
|
4,392 |
|
|
2,757 |
|
Short-term debt |
|
|
789 |
|
|
— |
|
Total
current liabilities |
|
|
16,051 |
|
|
16,040 |
|
Other long-term
liabilities |
|
|
993 |
|
|
940 |
|
Long-term debt,
net |
|
|
25,886 |
|
|
13,744 |
|
Total
liabilities |
|
|
42,930 |
|
|
30,724 |
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 10,849,385
and 10,319,627 shares issued and outstanding in fiscal 2017 and
fiscal 2016, respectively |
|
|
11 |
|
|
10 |
|
Additional paid-in capital |
|
|
125,999 |
|
|
121,806 |
|
Accumulated other comprehensive loss |
|
|
(1) |
|
|
(2) |
|
Accumulated deficit |
|
|
(77,836) |
|
|
(33,236) |
|
Total
stockholders’ equity |
|
|
48,173 |
|
|
88,578 |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
91,103 |
|
$ |
119,302 |
|
|
|
|
|
|
|
|
|
Company Contacts:
Nuvectra Corporation
Walter Berger, COO & CFO
(214) 474-3102
wberger@nuvectramed.com
Investor Contacts:
The Ruth Group
Tram Bui / Brian Johnston
(646) 536-7035 / 7028
investors@nuvectramed.com
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