Treace Medical Concepts, Inc. (“Treace” or the “Company”)
(NasdaqGS: TMCI), a commercial-stage orthopaedic medical device
company driving a paradigm shift in the surgical treatment of
Hallux Valgus (commonly known as bunions), today reported financial
results for the first quarter ended March 31, 2021.
Recent Highlights:
- Revenue of $18.7 million, a 66%
increase over the same period last year
- Gross margin of 82.2%, an increase
of 340 basis points from the same period last year
- Completed initial public offering
with $107.1 million in proceeds, net of underwriting discounts,
commissions and offering costs
- Interim results from ALIGN3D™
clinical study demonstrating positive radiographic and
patient-reported outcomes starting at 6 weeks and maintained at 12
months
“We are pleased to report a solid start to 2021,
with strength led by our expanding direct sales channel and surgeon
and patient education initiatives, particularly as we exited the
first quarter,” said John T. Treace, CEO, Founder and Board Member
of Treace. “As we navigate toward a potential return to normalcy
through 2021, we believe we are well positioned to drive continued
market penetration of our Lapiplasty® system leveraging a
comprehensive set of tools and capabilities that include a body of
clinical evidence demonstrating consistent, reliable correction and
low recurrence rates.”
First Quarter 2021 Financial
Results Revenue for the first quarter of 2021 was
$18.7 million, representing an increase of 66.2% compared to $11.3
million in the first quarter of 2020. The increase was driven by an
increased number of Lapiplasty Procedure Kits sold and an expanded
customer base.
Gross profit for the first quarter of 2021 was
$15.4 million, compared to a gross profit of $8.9 million in the
first quarter of 2020. Gross margin increased to 82.2% in the first
quarter of 2021, compared to 78.8% in the first quarter of 2020.
Gross margin expansion was the result of increased number of
Lapiplasty® Procedure Kits sold and a higher average blended
ASP.
Total operating expenses were $16.8 million in
the first quarter of 2021, including sales and marketing (S&M)
expenses of $12.1 million, research and development (R&D)
expenses of $1.9 million, and general and administrative expenses
(G&A) expenses of $2.8 million. This compared to total
operating expenses of $10.1 million, including S&M expenses of
$7.3 million, R&D expenses of $1.4 million, and G&A
expenses of $1.3 million in the first quarter of 2020.
First quarter net loss was ($2.6) million, or
($0.07) per share, compared to net loss of ($1.8) million, or
($0.05) per share, for the same period of 2020.
Cash and cash equivalents were $16.2 million as
of March 31, 2021. This excludes cash proceeds of $118.3 million
before underwriting discounts, commissions and offering costs from
the Company’s initial public offering that closed in April
2021.
Financial Outlook Treace Medical Concepts
projects revenue for the full year 2021 to range from $87 million
to $92 million, which represents approximately 52% to 60% growth
over the Company’s fiscal year 2020 revenue.
Webcast and Conference Call
Details Treace Medical Concepts will host a
conference call today, May 25, 2021, at 4:30 p.m. ET to discuss its
first quarter 2021 financial results. The dial-in numbers are (833)
730-3977 for domestic callers or (720) 405-2122 for international
callers, followed by Conference ID: 1157038. The live webcast of
the conference call will be available on the Investor Relations
section of the Company’s website at https://investors.treace.com/.
The webcast will be archived on the website following the
completion of the call.
Use of Non-GAAP Financial
Measures To supplement the financial results
presented in accordance with GAAP, this earnings release presents
Adjusted EBITDA, which the Company defines as net loss before
depreciation and amortization expense, stock-based compensation
expense and interest income/expense. Adjusted EBITDA is being
presented in addition to, and not as a substitute for, or superior
to, financial measures calculated in accordance with GAAP.
Management uses Adjusted EBITDA to evaluate the Company’s operating
performance and trends, as well as for making planning decisions.
The Company believes that Adjusted EBITDA helps to identify
underlying trends in the Company’s business that could otherwise be
masked by the effect of the expenses and other items that it
excludes in Adjusted EBITDA. Accordingly, the Company believes
Adjusted EBITDA provides useful information to investors and others
in understanding and evaluating the Company’s operating results,
enhancing the overall understanding of its past performance and
future prospects, and allows for greater transparency with respect
to the key financial metrics used by the Company’s management in
their financial and operational decision-making. The Company also
presents Adjusted EBITDA because it believes investors, analysts
and rating agencies consider it a useful metric in measuring the
Company’s performance against other companies and its ability to
meet its debt service obligations.
There are limitations related to the use of
non-GAAP financial measures such as Adjusted EBITDA because they
are not prepared in accordance with GAAP, may exclude significant
expenses required by GAAP to be recognized in the Company’s
financial statements, and may not be comparable to non-GAAP
financial measures used by other companies. The Company encourages
investors to carefully consider its results under GAAP, as well as
its supplemental non‐GAAP information and the reconciliation
between these presentations, to more fully understand its business.
Reconciliations between GAAP and non‐GAAP results are presented
below.
Forward-Looking
Statements This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact are forward-looking statements,
including, but not limited to the Company’s expectations that the
market will continue to recover as 2021 unfolds; the Company’s
belief that it is well positioned to drive continued market
penetration of the Lapiplasty® system; and the Company’s estimated
revenue for the remainder of 2021. Forward-looking statements are
based on management’s current assumptions and expectations of
future events and trends, which affect or may affect the Company’s
business, strategy, operations or financial performance, and actual
results and other events may differ materially from those expressed
or implied in such statements due to numerous risks and
uncertainties. Forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or
quantified. Factors that could cause actual results or other events
to differ materially from those contemplated in this press release
can be found in the Risk Factors section of Treace’s public filings
with the Securities and Exchange Commission (SEC), including in the
final prospectus filed with the SEC on April 26, 2021 in connection
with Treace’s initial public offering. Because forward-looking
statements are inherently subject to risks and uncertainties, you
should not rely on these forward-looking statements as predictions
of future events. These forward-looking statements speak only as of
their date and, except to the extent required by law, the Company
undertakes no obligation to update these statements, whether as a
result of any new information, future developments or otherwise.
The Company’s results for the quarter ended March 31, 2021 are not
necessarily indicative of our operating results for any future
periods.
About Treace Medical
Concepts Treace Medical Concepts is a
commercial-stage orthopaedic medical device company with the goal
of advancing the standard of care for the surgical management of
bunion deformities. Bunions are complex 3-dimensional deformities
that originate from an unstable joint in the middle of the foot.
Treace has pioneered and patented the Lapiplasty® 3D Bunion
Correction™ system - a combination of instruments, implants, and
surgical methods designed to correct all 3 planes of the bunion
deformity and secure the unstable joint, addressing the root cause
of the bunion and getting patients back to their active lives
quickly.
To learn more about Lapiplasty® 3D Bunion
Correction™, or find a Lapiplasty® surgeon in your area, please
visit: www.AlignMyToe.com or www.Lapiplasty.com.
Contacts:
Treace Medical ConceptsMark L. HairChief
Financial Officermhair@treace.net(904) 373-5940
Investors:
Gilmartin GroupLynn Lewis or Vivian
CervantesIR@treace.net
Treace Medical Concepts, Inc.
Condensed Statements of Operations and Comprehensive
Loss (in thousands, except share and per share
amounts) (unaudited)
|
Three Months Ended March 31, |
|
2021 |
|
|
2020 |
|
Revenue |
$ |
18,707 |
|
|
$ |
11,256 |
|
Cost of goods sold |
|
3,327 |
|
|
|
2,389 |
|
Gross profit |
|
15,380 |
|
|
|
8,867 |
|
Operating expenses |
|
|
|
|
|
Sales and marketing |
|
12,148 |
|
|
|
7,338 |
|
Research and development |
|
1,868 |
|
|
|
1,433 |
|
General and administrative |
|
2,766 |
|
|
|
1,295 |
|
Total operating expenses |
|
16,782 |
|
|
|
10,066 |
|
Loss from operations |
|
(1,402 |
) |
|
|
(1,199 |
) |
Interest and other income,
net |
|
1 |
|
|
|
33 |
|
Interest expense |
|
(1,031 |
) |
|
|
(441 |
) |
Other income (expense),
net |
|
(1,030 |
) |
|
|
(408 |
) |
Net loss and comprehensive
loss |
|
(2,432 |
) |
|
|
(1,607 |
) |
Convertible preferred stock
cumulative and undeclared dividends |
|
(158 |
) |
|
|
(158 |
) |
Net loss attributable to
common stockholders |
$ |
(2,590 |
) |
|
$ |
(1,765 |
) |
Net loss per share
attributable to common stockholders, basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.05 |
) |
Weighted-average shares used in computing net loss per share
attributable to common stockholders, basic and diluted |
|
37,854,687 |
|
|
|
37,052,294 |
|
|
|
|
|
|
|
|
|
Treace Medical Concepts, Inc.
Condensed Balance Sheets (in thousands,
except share and per share amounts) (unaudited)
|
March 31, |
|
December 31, |
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
16,218 |
|
|
$ |
18,079 |
|
Accounts receivable, net of allowance for doubtful accounts of $329
and $446 as of March 31, 2021 and December 31, 2020,
respectively |
|
10,793 |
|
|
|
14,486 |
|
Inventories |
|
7,370 |
|
|
|
7,820 |
|
Prepaid expenses and other current assets |
|
2,072 |
|
|
|
593 |
|
Total current assets |
|
36,453 |
|
|
|
40,978 |
|
Property and equipment,
net |
|
929 |
|
|
|
829 |
|
Total assets |
$ |
37,382 |
|
|
$ |
41,807 |
|
|
|
|
|
|
|
Liabilities, and
Stockholders’ Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
$ |
1,269 |
|
|
$ |
2,265 |
|
Accrued liabilities |
|
2,821 |
|
|
|
1,848 |
|
Accrued commissions |
|
2,716 |
|
|
|
3,513 |
|
Accrued compensation |
|
1,782 |
|
|
|
2,183 |
|
Short-term debt |
|
- |
|
|
|
1,788 |
|
Total current liabilities |
|
8,588 |
|
|
|
11,598 |
|
Derivative liability on term
loan |
|
245 |
|
|
|
245 |
|
Long-term debt, net of discount of $767 and $811 as of March 31,
2021 and December 31, 2020, respectively |
|
29,233 |
|
|
|
29,189 |
|
Total liabilities |
|
38,066 |
|
|
|
41,031 |
|
Commitments and contingencies
(Note 7) |
|
|
|
|
|
Stockholders’ (deficit)
equity |
|
|
|
|
|
Series A preferred stock, $0.001 par value, 6,687,500 shares
authorized; 6,687,475 shares issued and outstanding as of March 31,
2021 and December 31, 2020, respectively; liquidation value of
$8,000 as of March 31, 2021 and December 31, 2020,
respectively |
|
7,935 |
|
|
|
7,935 |
|
Common stock Class A, $0.001 par value, 66,875,000 shares
authorized as of March 31, 2021 and December 31, 2020,
respectively; 38,057,416 shares and 37,366,865 issued and
outstanding as of March 31, 2021 and December 31, 2020,
respectively |
|
30 |
|
|
|
28 |
|
Common stock Class B, $0.001 par value, 1,000,000 shares authorized
as of March 31, 2021 and December 31, 2020, respectively; no
shares issued and outstanding as of March 31, 2021 and
December 31, 2020 |
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
15,136 |
|
|
|
14,166 |
|
Accumulated deficit |
|
(23,785 |
) |
|
|
(21,353 |
) |
Total stockholders’ (deficit)
equity |
|
(684 |
) |
|
|
776 |
|
Total liabilities, and stockholders’ (deficit) equity |
$ |
37,382 |
|
|
$ |
41,807 |
|
|
|
|
|
|
|
|
|
Treace Medical Concepts,
Inc. Condensed Statements of Cash
Flows (in
thousands) (unaudited)
|
Three Months Ended March 31, |
|
2021 |
|
|
2020 |
|
Cash flows from
operating activities |
|
|
|
|
|
Net loss |
$ |
(2,432 |
) |
|
$ |
(1,607 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities |
|
|
|
|
|
Depreciation and amortization expense |
|
117 |
|
|
|
304 |
|
(Recovery) Provision for allowance for doubtful accounts |
|
(77 |
) |
|
|
73 |
|
Share-based compensation expense |
|
402 |
|
|
|
209 |
|
Amortization of debt issuance costs |
|
43 |
|
|
|
65 |
|
(Recovery) Provision for inventory obsolescence |
|
(27 |
) |
|
|
53 |
|
Net changes in operating assets and liabilities: |
|
|
|
|
|
Accounts Receivable |
|
3,769 |
|
|
|
3,807 |
|
Inventory |
|
478 |
|
|
|
(1,360 |
) |
Prepaid expenses and other assets |
|
(379 |
) |
|
|
147 |
|
Accounts payable |
|
(1,173 |
) |
|
|
1,465 |
|
Accrued liabilities |
|
(1,167 |
) |
|
|
(4,051 |
) |
Net cash used in operating
activities |
|
(446 |
) |
|
|
(895 |
) |
Cash flows from
investing activities |
|
|
|
|
|
Purchases of property and equipment |
|
(196 |
) |
|
|
(674 |
) |
Net cash used in investing
activities |
|
(196 |
) |
|
|
(674 |
) |
Cash flows from
financing activities |
|
|
|
|
|
Repayment on SBA Loan |
|
(1,788 |
) |
|
|
- |
|
Debt issuance costs |
|
- |
|
|
|
(8 |
) |
Proceeds from exercise of employee stock options |
|
569 |
|
|
|
41 |
|
Net cash (used in) provided by
financing activities |
|
(1,219 |
) |
|
|
33 |
|
Net decrease in cash and cash
equivalents |
|
(1,861 |
) |
|
|
(1,536 |
) |
Cash and cash equivalents at
beginning of year |
|
18,079 |
|
|
|
12,139 |
|
Cash and cash equivalents at
end of year |
$ |
16,218 |
|
|
$ |
10,603 |
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
Cash paid for interest |
$ |
1,945 |
|
|
$ |
- |
|
|
|
|
|
|
|
NONCASH FINANCING
ACTIVITIES: |
|
|
|
|
|
Unpaid offering costs included in accounts payable and accrued
liabilities |
$ |
1,118 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
Treace Medical Concepts,
Inc.Reconciliation of GAAP Net Loss to Adjusted
EBITDA
|
|
Three Months Ended March 31,
2021 |
|
Three Months Ended March 31,
2020 |
|
|
|
|
|
|
Net
Loss |
$ |
(2,432 |
) |
|
$ |
(1,607 |
) |
|
|
|
|
|
|
|
|
|
|
Depreciation & Amortization expense |
|
96 |
|
|
|
303 |
|
|
Stock based compensation
expense |
|
402 |
|
|
|
209 |
|
|
Interest income/expense |
|
1,030 |
|
|
|
408 |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
(903 |
) |
|
$ |
(687 |
) |
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