Nuvectra® Reports Third Quarter 2018 Financial Results
October 29 2018 - 4:01PM
Reports Record Algovita® Sales of $12.5 million,
Up 98% YoY
Nuvectra Corporation (NASDAQ: NVTR), a neurostimulation medical
device company, announced today financial results for the third
quarter ended September 30, 2018.
Highlights
- Record consolidated revenues of $14.2 million, up 87% YoY
- Consolidated gross margin increased to 54%, up from 46% in the
third quarter of 2017
- Completed secondary offering with net proceeds of $64.6
million.
Scott Drees, CEO, said, “In the third quarter we
achieved record sales by opening new accounts and increasing
penetration in existing accounts, while expanding our consolidated
gross margin year over year. We also grew our U.S. commercial
team approximately 50% year over year, to now cover approximately
65 active territories. Following our successful secondary offering
in September, we believe we are positioned to further advance our
Algovita business and launch Virtis™ during the first half of 2019,
pending receipt of FDA approval.”
Third Quarter Financial
Results
Total revenue in the third quarter of 2018 was
$14.2 million, an 87% increase from $7.6 million in the third
quarter of 2017. Total Algovita sales were $12.5 million, a 98%
increase from $6.3 million in the third quarter of 2017. Gross
profit in the third quarter of 2018 was $7.6 million, or 54% gross
margin, an increase from $3.5 million, or 46% gross margin, in the
third quarter of 2017.
Operating expenses in the third quarter of 2018
were $19.6 million, a 35% increase from $14.5 million in the third
quarter of 2017. The increase was primarily the result of an
increase in personnel-related expenses, principally for sales
personnel.
Net loss for the third quarter of 2018 was
$(13.0) million or $(0.87) per share, compared with a net loss of
$(11.6) million, or $(1.09) per share, for the third quarter of
2017.
Total cash and cash equivalents were $101.9
million as of September 30, 2018, including net proceeds of $64.6
million from the secondary offering that closed on September 14,
2018 and $5 million from the draw-down of the last tranche in the
credit facility.
Conference Call Information
Nuvectra will hold a conference call today,
Monday, October 29, 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
2584108. 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 October 29, 2018 through November 5, 2018. To access the replay,
dial (855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 2584108. 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
Nuvectra® 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 of our Credit Facility; and (xvii) our
ability to raise capital 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
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
AND COMPREHENSIVE LOSS
— Unaudited |
(in thousands except
per share data) |
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30,
2018 |
|
September 30,
2017 |
|
September 30,
2018 |
|
September 30,
2017 |
|
Sales: |
|
|
|
|
|
|
|
|
Product |
$ |
13,813 |
|
|
$ |
7,431 |
|
|
$ |
36,686 |
|
|
$ |
18,684 |
|
|
Service |
|
403 |
|
|
|
186 |
|
|
|
1,253 |
|
|
|
1,196 |
|
|
Total sales |
|
14,216 |
|
|
|
7,617 |
|
|
|
37,939 |
|
|
|
19,880 |
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
Product |
|
6,361 |
|
|
|
4,019 |
|
|
|
16,577 |
|
|
|
9,393 |
|
|
Service |
|
236 |
|
|
|
132 |
|
|
|
1,064 |
|
|
|
708 |
|
|
Total cost of sales |
|
6,597 |
|
|
|
4,151 |
|
|
|
17,641 |
|
|
|
10,101 |
|
|
Gross profit |
|
7,619 |
|
|
|
3,466 |
|
|
|
20,298 |
|
|
|
9,779 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
15,221 |
|
|
|
11,358 |
|
|
|
40,814 |
|
|
|
33,349 |
|
|
Research, development and engineering costs,
net |
|
4,385 |
|
|
|
3,136 |
|
|
|
11,891 |
|
|
|
10,730 |
|
|
Total operating expenses |
|
19,606 |
|
|
|
14,494 |
|
|
|
52,705 |
|
|
|
44,079 |
|
|
Operating loss |
|
(11,987 |
) |
|
|
(11,028 |
) |
|
|
(32,407 |
) |
|
|
(34,300 |
) |
|
Interest expense, net |
|
986 |
|
|
|
422 |
|
|
|
2,772 |
|
|
|
1,190 |
|
|
Other expense, net |
|
11 |
|
|
|
179 |
|
|
|
88 |
|
|
|
499 |
|
|
Loss before provision for income taxes |
|
(12,984 |
) |
|
|
(11,629 |
) |
|
|
(35,267 |
) |
|
|
(35,989 |
) |
|
Provision for income taxes |
|
(17 |
) |
|
|
9 |
|
|
|
11 |
|
|
|
9 |
|
|
Net loss |
$ |
(12,967 |
) |
|
$ |
(11,638 |
) |
|
$ |
(35,278 |
) |
|
$ |
(35,998 |
) |
|
|
|
|
|
|
|
|
|
|
Other comprehensive gain: |
|
|
|
|
|
|
|
|
Unrealized holding gain on
investments arising during period |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
2 |
|
|
Other comprehensive gain |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
2 |
|
|
Comprehensive loss |
$ |
(12,967 |
) |
|
$ |
(11,638 |
) |
|
$ |
(35,277 |
) |
|
$ |
(35,996 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share |
$ |
(0.87 |
) |
|
$ |
(1.09 |
) |
|
$ |
(2.55 |
) |
|
$ |
(3.43 |
) |
|
Basic and diluted weighted average shares
outstanding |
|
14,840 |
|
|
|
10,697 |
|
|
|
13,852 |
|
|
|
10,497 |
|
|
NUVECTRA
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS—Unaudited |
(in thousands except
share and per share data) |
|
|
|
As of |
|
|
|
September 30,
2018 |
|
|
December
31,2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
101,858 |
|
|
$ |
28,165 |
|
Trade accounts receivable, net of allowance for
doubtful accounts of $637 and $417 in 2018 and 2017,
respectively |
|
|
11,394 |
|
|
|
10,875 |
|
Inventories |
|
|
4,476 |
|
|
|
4,978 |
|
Prepaid expenses and other current assets |
|
|
1,420 |
|
|
|
1,011 |
|
Total current assets |
|
|
119,148 |
|
|
|
45,029 |
|
Property, plant and equipment, net |
|
|
5,655 |
|
|
|
6,219 |
|
Intangible assets, net |
|
|
1,204 |
|
|
|
1,428 |
|
Goodwill |
|
|
38,182 |
|
|
|
38,182 |
|
Other long-term assets |
|
|
— |
|
|
|
245 |
|
Total assets |
|
$ |
164,189 |
|
|
$ |
91,103 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
230 |
|
|
$ |
2,043 |
|
Accrued liabilities |
|
|
9,977 |
|
|
|
8,827 |
|
Accrued compensation |
|
|
5,409 |
|
|
|
4,392 |
|
Short-term debt |
|
|
— |
|
|
|
789 |
|
Total current liabilities |
|
|
15,616 |
|
|
|
16,051 |
|
Other long-term liabilities |
|
|
516 |
|
|
|
993 |
|
Long-term debt, net |
|
|
43,824 |
|
|
|
25,886 |
|
Total liabilities |
|
|
59,956 |
|
|
|
42,930 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 100,000,000
shares authorized; 17,573,669 and 10,849,385 shares issued and
outstanding in 2018 and 2017, respectively |
|
|
18 |
|
|
|
11 |
|
Additional paid-in capital |
|
|
217,329 |
|
|
|
125,999 |
|
Accumulated other comprehensive loss |
|
|
— |
|
|
|
(1 |
) |
Accumulated deficit |
|
|
(113,114 |
) |
|
|
(77,836 |
) |
Total stockholders’ equity |
|
|
104,233 |
|
|
|
48,173 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
164,189 |
|
|
$ |
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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