Nuvectra Corporation (NASDAQ: NVTR), a neurostimulation medical
device company, announced today financial results for the second
quarter ended June 30, 2018.
Highlights
- Reported record consolidated revenues of $13.1 million for the
second quarter 2018.
- Reached approximately 60 active territories for U.S.
Algovita.
- Submitted Virtis™ response to FDA, initiated new 180-day review
process.
Scott Drees, CEO, said, “The second quarter
represented another record quarter for our Algovita business, which
benefited from new accounts, as well as from increased penetration
in existing accounts. Our growth was further accelerated through
the continued expansion of our U.S. commercial team, which now
approximates 60 active territories. We look forward to further
advancing our commercial momentum through 2018 and beginning to
prepare for 2019.”
Mr. Drees continued, “With respect to Virtis, we
have recently filed our response to FDA's requests, which we
received late in the second quarter. FDA now has 180 days from our
submission to review our response. Our focus remains on gaining
U.S. approval as soon as possible, and we are working proactively
with FDA to this end.”
Second Quarter Financial Results
Total revenue in the second quarter of 2018 was
$13.1 million, an 82% increase from $7.2 million in the second
quarter of 2017. Total Algovita sales were $11.5 million, a 110%
increase from $5.5 million in the second quarter of 2017. Gross
profit in the second quarter of 2018 was $6.9 million, or 53% gross
margin, an increase from $3.7 million, or 51% gross margin, in the
second quarter of 2017.
Operating expenses in the second quarter of 2018
were $17.7 million, a 23% increase from $14.4 million in the second
quarter of 2017. The increase was primarily the result of an
increase in sales personnel-related expenses as we have continued
to increase sales of our Algovita product, as well as an increase
in research, development and engineering personnel-related expenses
and the timing of research project-related expenses.
Net loss for the second quarter of 2018 was
$(11.8) million or $(0.83) per share, compared with a net loss of
$(11.2) million, or $(1.07) per share, for the second quarter of
2017.
Total cash and cash equivalents were $43.7
million as of June 30, 2018.
Conference Call Information
Nuvectra will hold a conference call today,
Tuesday, August 7, 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
2980358. 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 7, 2018 through August 14, 2018. To access the replay,
dial (855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 2980358. 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 and
timing 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 and when 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) our reliance on each of
Integer, our exclusive and sole manufacturer and supplier of parts
and components for Algovita, and Minnetronix, Inc., our sole-source
supplier of external peripheral devices; (xiv) any supplier
shortages related to Algovita or its components and any
manufacturing disruptions which may impact our inventory supply as
we expand our business; (xv) any product recalls, or the receipt of
any warning letters, mandatory corrections or fines from any
governmental or regulatory agency; (xvi) our ability to satisfy the
conditions and covenants, including trailing six month revenue
milestones, of our Credit Facility; and (xvii) our ability to raise
capital through means other than or in addition to the Credit
Facility should it become necessary to do so, through another
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
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSAND COMPREHENSIVE LOSS —
Unaudited(IN THOUSANDS EXCEPT PER SHARE
DATA)
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2018 |
|
June 30, 2017 |
|
June 30, 2018 |
|
June 30, 2017 |
|
Sales: |
|
|
|
|
|
|
|
|
Product |
$ |
12,755 |
|
|
$ |
6,665 |
|
|
$ |
22,873 |
|
|
$ |
11,253 |
|
|
Service |
|
394 |
|
|
|
558 |
|
|
|
850 |
|
|
|
1,010 |
|
|
Total
sales |
|
13,149 |
|
|
|
7,223 |
|
|
|
23,723 |
|
|
|
12,263 |
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
Product |
|
5,762 |
|
|
|
3,273 |
|
|
|
10,216 |
|
|
|
5,374 |
|
|
Service |
|
474 |
|
|
|
266 |
|
|
|
828 |
|
|
|
576 |
|
|
Total
cost of sales |
|
6,236 |
|
|
|
3,539 |
|
|
|
11,044 |
|
|
|
5,950 |
|
|
Gross
profit |
|
6,913 |
|
|
|
3,684 |
|
|
|
12,679 |
|
|
|
6,313 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
13,460 |
|
|
|
11,186 |
|
|
|
25,593 |
|
|
|
21,991 |
|
|
Research,
development and engineering costs, net |
|
4,226 |
|
|
|
3,221 |
|
|
|
7,506 |
|
|
|
7,594 |
|
|
Total
operating expenses |
|
17,686 |
|
|
|
14,407 |
|
|
|
33,099 |
|
|
|
29,585 |
|
|
Operating
loss |
|
(10,773 |
) |
|
|
(10,723 |
) |
|
|
(20,420 |
) |
|
|
(23,272 |
) |
|
Interest expense,
net |
|
936 |
|
|
|
398 |
|
|
|
1,786 |
|
|
|
768 |
|
|
Other expense, net |
|
54 |
|
|
|
117 |
|
|
|
77 |
|
|
|
320 |
|
|
Loss
before provision for income taxes |
|
(11,763 |
) |
|
|
(11,238 |
) |
|
|
(22,283 |
) |
|
|
(24,360 |
) |
|
Provision for income
taxes |
|
15 |
|
|
|
— |
|
|
|
28 |
|
|
|
— |
|
|
Net
loss |
$ |
(11,778 |
) |
|
$ |
(11,238 |
) |
|
$ |
(22,311 |
) |
|
$ |
(24,360 |
) |
|
Other comprehensive
gain: |
|
|
|
|
|
|
|
|
Unrealized holding gain on investments arising during
period |
|
— |
|
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
Other comprehensive
gain |
|
— |
|
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
Comprehensive loss |
$ |
(11,778 |
) |
|
$ |
(11,236 |
) |
|
$ |
(22,310 |
) |
|
$ |
(24,358 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share |
$ |
(0.83 |
) |
|
$ |
(1.07 |
) |
|
$ |
(2.04 |
) |
|
$ |
(2.34 |
) |
|
Basic and diluted
weighted average shares outstanding |
|
14,209 |
|
|
|
10,458 |
|
|
|
10,922 |
|
|
|
10,396 |
|
|
NUVECTRA
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS—Unaudited(IN THOUSANDS EXCEPT SHARE AND PER
SHARE DATA)
|
|
As of |
|
|
|
June 30,2018 |
|
|
December 31,2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
43,694 |
|
|
$ |
28,165 |
|
Trade
accounts receivable, net of allowance for doubtful accounts of $539
and $417 in 2018 and 2017, respectively |
|
|
10,037 |
|
|
|
10,875 |
|
Inventories |
|
|
4,717 |
|
|
|
4,978 |
|
Prepaid
expenses and other current assets |
|
|
1,792 |
|
|
|
1,011 |
|
Total
current assets |
|
|
60,240 |
|
|
|
45,029 |
|
Property, plant and
equipment, net |
|
|
5,873 |
|
|
|
6,219 |
|
Intangible assets,
net |
|
|
1,278 |
|
|
|
1,428 |
|
Goodwill |
|
|
38,182 |
|
|
|
38,182 |
|
Other long-term
assets |
|
|
109 |
|
|
|
245 |
|
Total
assets |
|
$ |
105,682 |
|
|
$ |
91,103 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,431 |
|
|
$ |
2,043 |
|
Accrued
liabilities |
|
|
8,534 |
|
|
|
8,827 |
|
Accrued
compensation |
|
|
4,748 |
|
|
|
4,392 |
|
Short-term debt |
|
|
- |
|
|
|
789 |
|
Total
current liabilities |
|
|
14,713 |
|
|
|
16,051 |
|
Other long-term
liabilities |
|
|
692 |
|
|
|
993 |
|
Long-term debt,
net |
|
|
38,674 |
|
|
|
25,886 |
|
Total
liabilities |
|
|
54,079 |
|
|
|
42,930 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 14,254,086
and 10,849,385 shares issued and outstanding in 2018 and 2017,
respectively |
|
|
14 |
|
|
|
11 |
|
Additional paid-in capital |
|
|
151,736 |
|
|
|
125,999 |
|
Accumulated other comprehensive loss |
|
|
— |
|
|
|
(1 |
) |
Accumulated deficit |
|
|
(100,147 |
) |
|
|
(77,836 |
) |
Total
stockholders’ equity |
|
|
51,603 |
|
|
|
48,173 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
105,682 |
|
|
$ |
91,103 |
|
Company
Contacts: |
|
Investor
Contacts: |
Nuvectra
Corporation |
|
The Ruth
Group |
|
|
|
Walter Berger, COO
& CFO |
|
Tram Bui / Brian
Johnston |
(214) 474-3102 |
|
(646) 536-7035 /
7028 |
wberger@nuvectramed.com |
|
investors@nuvectramed.com |
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