Venus Concept Inc. (“Venus Concept” or the “Company”) (NASDAQ:
VERO), a global medical aesthetic technology leader, announced
financial results for the three and nine months ended September 30,
2023.
Third Quarter 2023 Summary & Recent
Progress:
- Company continues to execute
against Transformational Plan
- Total revenue of $17.6 million,
down $3.9 million, or 18%, year-over-year
- Cash system revenue represented
approximately 69% of total systems and subscriptions revenue,
compared to 59% in the prior year period
- Operating expenses of $18.9
million, including approximately $0.8 million of costs related to
restructuring activities, down $5.9 million, or 24%,
year-over-year
- GAAP net loss attributable to
stockholders of $9.1 million, down $5.5 million, or 38%
year-over-year
- Adjusted EBITDA loss of $4.6
million, down $3.0 million, or 40% year-over-year
- Cash used in operations during the
first nine-months of 2023 of $12.1 million, down 49%
year-over-year
- On July 13, 2023, the Company
announced the establishment of a medical advisory board for
AI.ME
- On September 14, 2023, the Company
announced a 510(k) clearance from the U.S. Food and Drug
Administration (“FDA”) to market its Venus Versa Pro System, a new
multi-application platform, for a variety of aesthetic and cosmetic
procedures.
- On October 5, 2023, the Company
announced that it had finalized an agreement with its lenders to
restructure its existing debt obligations, improving the Company's
overall financial position by deferring certain principal and
interest payments under its senior debt and exchanging a portion of
its convertible notes for preferred stock.
- On October 12, 2023, the Company
announced the promotion of Dr. Hemanth Varghese to the newly
created role of President and Chief Operating Officer (COO),
reporting to Chief Executive Officer, Rajiv De Silva, effective
October 16, 2023. The Company also announced that Mr. Kirk Gunhus
had joined the Company as Vice President & General Manager,
International Sales and Marketing.
- On October 17, 2023, the Company
announced a company-wide rebranding initiative, introducing Venus
Aesthetic Intelligence (or "Venus AI") to reflect the new strategic
vision for the Company and an enhanced focus on emerging
technologies in aesthetics.
- On November 1, 2023, the Company
announced the commercial launch of its new multi-application
platform Venus Versa Pro in the United States.
Management Commentary:
“As previously announced, our third quarter
revenue results reflect better-than-expected performance in the
U.S. where sales increased 14% on a quarter-over-quarter basis,
offset by the impacts of our accelerated restructuring activities
in certain international markets,” said Rajiv De Silva, Chief
Executive Officer of Venus Concept. “We are pleased with the
progress we have made in our strategic turnaround plan in 2023. Our
restructuring efforts to reduce expenses are exceeding
expectations, and repositioning of the business in the US and
internationally supports growth in 2024. Our primary objective for
2023 has been to reduce cash burn by 50% or more year over year,
which we are still on track to achieve due to our cost
restructuring efforts. The recently announced debt restructuring
activities provide Venus Concept with substantial additional
liquidity to support maintenance of ongoing operations, execution
of our near-to-intermediate term strategic turnaround objectives
and funding of priority investments in key R&D initiatives. We
are committed to our stated priorities in 2023 to re-focusing the
business and repositioning Venus Concept to enhance the cash flow
profile of the Company and to accelerate the path to long-term,
sustainable, profitability and growth.”
Third Quarter of 2023 Revenue by Region
and by Product Type:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(dollars in thousands) |
|
(dollars in thousands) |
Revenues by region: |
|
|
|
|
|
|
|
|
|
|
|
United States |
$ |
11,167 |
|
$ |
11,774 |
|
$ |
31,665 |
|
$ |
38,319 |
International |
|
6,449 |
|
|
9,765 |
|
|
26,557 |
|
|
36,892 |
Total revenue |
$ |
17,616 |
|
$ |
21,539 |
|
$ |
58,222 |
|
$ |
75,211 |
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(dollars in thousands) |
|
(dollars in thousands) |
Revenues by product: |
|
|
|
|
|
|
|
|
|
|
|
Subscription—Systems |
$ |
4,368 |
|
$ |
7,193 |
|
$ |
14,440 |
|
$ |
29,490 |
Products—Systems |
|
9,834 |
|
|
10,416 |
|
|
33,212 |
|
|
33,838 |
Products—Other (1) |
|
2,487 |
|
|
3,125 |
|
|
8,019 |
|
|
9,702 |
Services |
|
927 |
|
|
805 |
|
|
2,551 |
|
|
2,181 |
Total revenue |
$ |
17,616 |
|
$ |
21,539 |
|
$ |
58,222 |
|
$ |
75,211 |
(1)
Products-Other include ARTAS procedure kits, Viva tips,
Glide and other consumables. |
|
Third Quarter 2023 Financial Results:
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
Change |
|
(in thousands, except
percentages) |
$ |
|
% of Total |
|
$ |
|
% of Total |
|
$ |
|
|
% |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription—Systems |
$ |
4,368 |
|
24.8 |
|
$ |
7,193 |
|
|
33.4 |
|
$ |
(2,825 |
) |
|
|
(39.3 |
) |
Products—Systems |
|
9,834 |
|
55.8 |
|
|
10,416 |
|
|
48.4 |
|
|
(582 |
) |
|
|
(5.6 |
) |
Products—Other |
|
2,487 |
|
14.1 |
|
|
3,125 |
|
|
14.5 |
|
|
(638 |
) |
|
|
(20.4 |
) |
Services |
|
927 |
|
5.3 |
|
|
805 |
|
|
3.7 |
|
|
122 |
|
|
|
15.2 |
|
Total |
$ |
17,616 |
|
100.0 |
|
$ |
21,539 |
|
|
100.0 |
|
$ |
(3,923 |
) |
|
|
(18.2 |
) |
|
Total revenue for the third quarter of 2023
decreased $3.9 million, or 18%, to $17.6 million, compared to the
third quarter of 2022. The decrease in total revenue, by region,
was driven by a 34% decrease year-over-year in international
revenue and a 5% decrease year-over-year in United States revenue.
Our international business was impacted by the Company's decision
to exit three unprofitable direct markets in the past year, as well
as general macroeconomic headwinds that impacted customer access to
capital. The decrease in total revenue, by product category, was
driven by a 39% decrease in lease revenue, a 20% decrease in
products - other revenue and a 6% decrease in products – systems
revenue, partially offset by a 15% increase in services revenue.
The percentage of total systems revenue derived from the Company’s
subscription model was approximately 31% in the third quarter of
2023, compared to 41% in the prior year period.
Gross profit for the third quarter of 2023
decreased $1.2 million, or 9%, to $12.2 million compared to the
third quarter of 2022. The change in gross profit was primarily due
to a decrease in revenue in our international markets driven by the
accelerated exit from unprofitable direct markets as discussed
above. Gross margin was 69.2% of revenue, compared to 62.1% of
revenue for the third quarter of 2022. The change in gross margin
was primarily due to significant inventory write-offs in the third
quarter of 2022 which did not repeat this quarter, and a $0.8
million foreign exchange headwind as a result of certain foreign
currencies depreciating relative to the U.S. dollar. Excluding the
inventory write-offs in the third quarter of 2022 and the impact of
changes in foreign exchange, third quarter gross margin was 73.6%,
compared to 72.1% last year, an increase of 150 basis points
year-over-year.
Operating expenses for the third quarter of 2023
decreased $5.9 million, or 24%, to $18.9 million, compared to the
third quarter of 2022. The change in total operating expenses was
driven by a decrease of $2.5 million, or 26%, in selling and
marketing expenses, a decrease of $2.3 million, or 19%, in general
and administrative expenses and a decrease of $1.1 million, or 36%,
in research and development expenses. Third quarter of 2023 general
and administrative expenses included approximately $0.8 million of
costs related to restructuring activities designed to improve the
Company's operations and cost structure.
Operating loss for the third quarter of 2023 was
$6.8 million, compared to operating loss of $11.4 million for the
third quarter of 2022.
Net loss attributable to stockholders for the
third quarter of 2023 was $9.1 million, or $1.64 per share,
compared to net loss of $14.6 million, or $3.36 per share for the
third quarter of 2022. Adjusted EBITDA loss for the third quarter
of 2023 was $4.6 million, compared to adjusted EBITDA loss of $7.7
million for the third quarter of 2022.
As of September 30, 2023, the Company had cash
and cash equivalents of $4.9 million and total debt obligations of
approximately $79.0 million, compared to $11.6 million and $77.7
million, respectively, as of December 31, 2022.
Fiscal Year 2023 Revenue Guidance:
The Company continues to expect total revenue
for the twelve months ending December 31, 2023 in the range of
$80.0 million to $82.0 million, compared to total revenue of $99.5
million for the twelve months ended December 31, 2022.
Conference Call Details:
Management will host a conference call at 5:00
p.m. Eastern Time on November 14, 2023 to discuss the results of
the quarter with a question-and-answer session. Those who would
like to participate may dial 877-407-2991 (201-389-0925 for
international callers) and provide access code 13741931. A live
webcast of the call will also be provided on the investor relations
section of the Company's website at ir.venusconcept.com.
For those unable to participate, a replay of the
call will be available for two weeks at: 877-660-6853 (201-612-7415
for international callers); access code 13741934. The webcast will
be archived at ir.venusconcept.com.
About Venus Concept
Venus Concept is an innovative global medical
aesthetic technology leader with a broad product portfolio of
minimally invasive and non-invasive medical aesthetic and hair
restoration technologies and reach in over 60 countries and 14
direct markets. Venus Concept’s product portfolio consists of
aesthetic device platforms, including Venus Versa, Venus Versa Pro,
Venus Legacy, Venus Velocity, Venus Fiore, Venus Viva, Venus Glow,
Venus Bliss, Venus BlissMAX, Venus Epileve, Venus Viva MD and
AI.ME. Venus Concept’s hair restoration systems include NeoGraft®
and the ARTAS iX® Robotic Hair Restoration system. Venus Concept
has been backed by leading healthcare industry growth equity
investors including EW Healthcare Partners (formerly Essex
Woodlands), HealthQuest Capital, Longitude Capital Management,
Aperture Venture Partners, and Masters Special Situations.
Cautionary Statement Regarding
Forward-Looking Statements
This communication 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. Any statements contained herein that are not of historical
facts may be deemed to be forward-looking statements. In some
cases, you can identify these statements by words such as such as
“anticipates,” “believes,” “plans,” “expects,” “projects,”
“future,” “intends,” “may,” “should,” “could,” “estimates,”
“predicts,” “potential,” “continue,” “guidance,” and other similar
expressions that are predictions of or indicate future events and
future trends. These forward-looking statements include, but are
not limited to, statements about our financial performance; the
growth in demand for our systems and other products; the efficacy
of the Venus Versa Pro; the contribution of the Venus Versa Pro to
our revenue; the efficacy of the restructuring plan; and the
reduction in our cash burn. These forward-looking statements are
based on current expectations, estimates, forecasts, and
projections about our business and the industry in which the
Company operates and management's beliefs and assumptions and are
not guarantees of future performance or developments and involve
known and unknown risks, uncertainties, and other factors that are
in some cases beyond our control. As a result, any or all of our
forward-looking statements in this communication may turn out to be
inaccurate. Factors that could materially affect our business
operations and financial performance and condition include, but are
not limited to, those risks and uncertainties described under Part
II Item 1A—“Risk Factors” in our Quarterly Reports on Form 10-Q and
Part I Item 1A—“Risk Factors” in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2022. You are urged to consider
these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on the
forward-looking statements. The forward-looking statements are
based on information available to us as of the date of this
communication. Unless required by law, the Company does not intend
to publicly update or revise any forward-looking statements to
reflect new information or future events or otherwise.
Venus Concept
Inc.Condensed Consolidated Balance
Sheets(In thousands of U.S. dollars, except share
and per share data)
|
September 30, |
|
December 31, |
|
|
2023 |
|
2022 |
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
4,926 |
|
$ |
11,569 |
|
Accounts receivable, net of allowance of $12,811 and $13,619 as of
September 30, 2023, and December 31, 2022, respectively |
|
34,178 |
|
|
37,262 |
|
Inventories |
|
23,392 |
|
|
23,906 |
|
Prepaid expenses |
|
1,161 |
|
|
1,688 |
|
Advances to suppliers |
|
5,753 |
|
|
5,881 |
|
Other current assets |
|
2,357 |
|
|
3,702 |
|
Total current assets |
|
71,767 |
|
|
84,008 |
|
LONG-TERM ASSETS: |
|
|
|
|
|
|
Long-term receivables, net |
|
10,136 |
|
|
20,044 |
|
Deferred tax assets |
|
954 |
|
|
947 |
|
Severance pay funds |
|
593 |
|
|
741 |
|
Property and equipment, net |
|
1,503 |
|
|
1,857 |
|
Operating right-of-use assets, net |
|
4,647 |
|
|
5,862 |
|
Intangible assets |
|
9,321 |
|
|
11,919 |
|
Total long-term assets |
|
27,154 |
|
|
41,370 |
|
TOTAL ASSETS |
$ |
98,921 |
|
$ |
125,378 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Trade payables |
$ |
7,120 |
|
$ |
8,033 |
|
Accrued expenses and other current liabilities |
|
12,982 |
|
|
16,667 |
|
Current portion of long-term debt |
|
— |
|
|
7,735 |
|
Income taxes payable |
|
488 |
|
|
117 |
|
Unearned interest income |
|
1,854 |
|
|
2,397 |
|
Warranty accrual |
|
909 |
|
|
1,074 |
|
Deferred revenues |
|
1,133 |
|
|
1,765 |
|
Operating lease liabilities |
|
1,515 |
|
|
1,807 |
|
Total current liabilities |
|
26,001 |
|
|
39,595 |
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
Long-term debt |
|
79,049 |
|
|
70,003 |
|
Income tax payable |
|
— |
|
|
374 |
|
Deferred tax liabilities |
|
20 |
|
|
— |
|
Accrued severance pay |
|
693 |
|
|
867 |
|
Unearned interest revenue |
|
540 |
|
|
957 |
|
Warranty accrual |
|
356 |
|
|
408 |
|
Operating lease liabilities |
|
3,304 |
|
|
4,221 |
|
Other long-term liabilities |
|
336 |
|
|
215 |
|
Total long-term liabilities |
|
84,298 |
|
|
77,045 |
|
TOTAL LIABILITIES |
|
110,299 |
|
|
116,640 |
|
Commitments and Contingencies
(Note 9) |
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (DEFICIT)
(Note 14): |
|
|
|
|
|
|
Common Stock, $0.0001 par
value: 300,000,000 shares authorized as of September 30, 2023 and
December 31, 2022; 5,529,149 and 5,161,374 issued and outstanding
as of September 30, 2023, and December 31, 2022, respectively |
|
30 |
|
|
29 |
|
Additional paid-in
capital |
|
238,587 |
|
|
232,169 |
|
Accumulated deficit |
|
(250,787 |
) |
|
(224,105 |
) |
TOTAL STOCKHOLDERS’ EQUITY
(DEFICIT) |
|
(12,170 |
) |
|
8,093 |
|
Non-controlling interests |
|
792 |
|
|
645 |
|
|
|
(11,378 |
) |
|
8,738 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT) |
$ |
98,921 |
|
$ |
125,378 |
|
|
Venus Concept
Inc.Condensed Consolidated Statements of
Operations(In thousands of U.S. dollars, except
per share data)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Leases |
$ |
4,368 |
|
$ |
7,193 |
|
$ |
14,440 |
|
$ |
29,490 |
|
Products and services |
|
13,248 |
|
|
14,346 |
|
|
43,782 |
|
|
45,721 |
|
|
|
17,616 |
|
|
21,539 |
|
|
58,222 |
|
|
75,211 |
|
Cost of goods sold: |
|
|
|
|
|
|
|
|
|
|
|
|
Leases |
|
1,183 |
|
|
2,608 |
|
|
3,633 |
|
|
8,069 |
|
Products and services |
|
4,248 |
|
|
5,558 |
|
|
14,485 |
|
|
16,960 |
|
|
|
5,431 |
|
|
8,166 |
|
|
18,118 |
|
|
25,029 |
|
Gross profit |
|
12,185 |
|
|
13,373 |
|
|
40,104 |
|
|
50,182 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
6,907 |
|
|
9,369 |
|
|
23,319 |
|
|
30,976 |
|
General and administrative |
|
10,115 |
|
|
12,405 |
|
|
30,933 |
|
|
36,814 |
|
Research and development |
|
1,925 |
|
|
3,024 |
|
|
6,527 |
|
|
8,379 |
|
Total operating expenses |
|
18,947 |
|
|
24,798 |
|
|
60,779 |
|
|
76,169 |
|
Loss from operations |
|
(6,762 |
) |
|
(11,425 |
) |
|
(20,675 |
) |
|
(25,987 |
) |
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss |
|
909 |
|
|
2,014 |
|
|
379 |
|
|
4,389 |
|
Finance expenses |
|
1,605 |
|
|
1,219 |
|
|
4,666 |
|
|
3,176 |
|
Loss on disposal of subsidiaries |
|
1 |
|
|
— |
|
|
77 |
|
|
— |
|
Loss before income taxes |
|
(9,277 |
) |
|
(14,658 |
) |
|
(25,797 |
) |
|
(33,552 |
) |
Income tax (benefit)
expense |
|
(321 |
) |
|
(162 |
) |
|
103 |
|
|
92 |
|
Net loss |
|
(8,956 |
) |
|
(14,496 |
) |
|
(25,900 |
) |
|
(33,644 |
) |
Net loss attributable to
stockholders of the Company |
|
(9,068 |
) |
|
(14,605 |
) |
|
(26,134 |
) |
|
(33,783 |
) |
Net income attributable to
non-controlling interest |
|
112 |
|
|
109 |
|
|
234 |
|
|
139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(1.64 |
) |
$ |
(3.36 |
) |
$ |
(4.83 |
) |
$ |
(7.86 |
) |
Diluted |
$ |
(1.64 |
) |
$ |
(3.36 |
) |
$ |
(4.83 |
) |
$ |
(7.86 |
) |
Weighted-average number of
shares used in per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
5,527 |
|
|
4,351 |
|
|
5,413 |
|
|
4,298 |
|
Diluted |
|
5,527 |
|
|
4,351 |
|
|
5,413 |
|
|
4,298 |
|
|
Venus Concept
Inc.Condensed Consolidated Statements of Cash
Flows(in thousands)
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
$ |
(25,900 |
) |
$ |
(33,644 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
3,042 |
|
|
3,293 |
|
Stock-based compensation |
|
1,214 |
|
|
1,552 |
|
Provision for expected credit losses |
|
1,263 |
|
|
5,912 |
|
Provision for inventory obsolescence |
|
760 |
|
|
1,753 |
|
Finance expenses and accretion |
|
1,310 |
|
|
291 |
|
Deferred tax expense (recovery) |
|
14 |
|
|
(620 |
) |
Loss on disposal of subsidiary |
|
77 |
|
|
- |
|
Loss (gain) on disposal of property and equipment |
|
(1 |
) |
|
82 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
Accounts receivable short-term and long-term |
|
11,146 |
|
|
4,493 |
|
Inventories |
|
(246 |
) |
|
(5,451 |
) |
Prepaid expenses |
|
527 |
|
|
825 |
|
Advances to suppliers |
|
128 |
|
|
(124 |
) |
Other current assets |
|
1,268 |
|
|
407 |
|
Operating right-of-use assets, net |
|
1,215 |
|
|
5,714 |
|
Other long-term assets |
|
(380 |
) |
|
327 |
|
Trade payables |
|
(913 |
) |
|
(139 |
) |
Accrued expenses and other current liabilities |
|
(4,483 |
) |
|
(2,237 |
) |
Current operating lease liabilities |
|
(292 |
) |
|
(1,743 |
) |
Severance pay funds |
|
148 |
|
|
93 |
|
Unearned interest income |
|
(960 |
) |
|
(103 |
) |
Long-term operating lease liabilities |
|
(917 |
) |
|
(3,971 |
) |
Other long-term liabilities |
|
(105 |
) |
|
(283 |
) |
Net cash used in operating activities |
|
(12,085 |
) |
|
(23,573 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and equipment |
|
(89 |
) |
|
(297 |
) |
Net cash used in investing activities |
|
(89 |
) |
|
(297 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from issuance of common stock, net of costs |
|
1,109 |
|
|
415 |
|
2023 Multi-Tranche Private Placement, net of costs of $491 |
|
4,509 |
|
|
— |
|
Proceeds from exercise of options |
|
— |
|
|
23 |
|
Repayment of government assistance loans |
|
— |
|
|
(543 |
) |
Dividends from subsidiaries paid to non-controlling interest |
|
(87 |
) |
|
(124 |
) |
Net cash (used in) provided by financing activities |
|
5,531 |
|
|
(229 |
) |
NET DECREASE IN CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH |
|
(6,643 |
) |
|
(24,099 |
) |
CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH — Beginning of period |
|
11,569 |
|
|
30,876 |
|
CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH — End of period |
$ |
4,926 |
|
$ |
6,777 |
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid for income taxes |
$ |
90 |
|
$ |
152 |
|
Cash paid for interest |
$ |
3,356 |
|
$ |
2,885 |
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP measure defined as
net income (loss) before foreign exchange loss, financial expenses,
income tax expense (benefit), depreciation and amortization,
stock-based compensation and non-recurring items for a given
period. Adjusted EBITDA is not a measure of our financial
performance under U.S. GAAP and should not be considered an
alternative to net income or any other performance measures derived
in accordance with U.S. GAAP. Accordingly, you should consider
Adjusted EBITDA along with other financial performance measures,
including net income, and our financial results presented in
accordance with U.S. GAAP. Other companies, including companies in
our industry, may calculate Adjusted EBITDA differently or not at
all, which reduces its usefulness as a comparative measure. We
understand that although Adjusted EBITDA is frequently used by
securities analysts, lenders and others in their evaluation of
companies, Adjusted EBITDA has limitations as an analytical tool,
and you should not consider it in isolation, or as a substitute for
analysis of our results as reported under U.S. GAAP. Some of these
limitations are: Adjusted EBITDA does not reflect our cash
expenditures or future requirements for capital expenditures or
contractual commitments; Adjusted EBITDA does not reflect changes
in, or cash requirements for, our working capital needs; and
although depreciation and amortization are non-cash charges, the
assets being depreciated will often have to be replaced in the
future, and Adjusted EBITDA does not reflect any cash requirements
for such replacements.We believe that Adjusted EBITDA is a useful
measure for analyzing the performance of our core business because
it facilitates operating performance comparisons from period to
period and company to company by backing out potential differences
caused by changes in foreign exchange rates that impact financial
assets and liabilities denominated in currencies other than the
U.S. dollar, tax positions (such as the impact on periods or
companies of changes in effective tax rates), the age and book
depreciation of fixed assets (affecting relative depreciation
expense), amortization of intangible assets, stock-based
compensation expense (because it is a non-cash expense) and
non-recurring items as explained below.
The following reconciliation of net (loss)
income to Adjusted EBITDA for the periods presented:
Venus Concept
Inc.Reconciliation of Net
loss to Non-GAAP Adjusted EBITDA
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Reconciliation of net
loss to adjusted EBITDA |
|
(in thousands) |
|
(in thousands) |
|
Net loss |
|
$ |
(8,956 |
) |
$ |
(14,496 |
) |
$ |
(25,900 |
) |
$ |
(33,644 |
) |
Foreign exchange loss |
|
|
909 |
|
|
2,014 |
|
|
379 |
|
|
4,389 |
|
Loss on disposal of
subsidiaries |
|
|
1 |
|
|
— |
|
|
77 |
|
|
— |
|
Finance expenses |
|
|
1,605 |
|
|
1,219 |
|
|
4,666 |
|
|
3,176 |
|
Income tax (benefit)
expense |
|
|
(321 |
) |
|
(162 |
) |
|
103 |
|
|
92 |
|
Depreciation and
amortization |
|
|
1,010 |
|
|
1,081 |
|
|
3,042 |
|
|
3,293 |
|
Stock-based compensation
expense |
|
|
364 |
|
|
551 |
|
|
1,214 |
|
|
1,552 |
|
Inventory Provision (1) |
|
|
— |
|
|
1,388 |
|
|
— |
|
|
1,388 |
|
Other
adjustments (2) |
|
|
752 |
|
|
726 |
|
|
2,082 |
|
|
726 |
|
Adjusted EBITDA |
|
$ |
(4,636 |
) |
$ |
(7,679 |
) |
$ |
(14,337 |
) |
$ |
(19,028 |
) |
|
(1) For the three and nine months ended September 30, 2022, the
inventory provision represents a strategic review of our product
offerings which culminated in a decision to discontinue production
and sale of certain models and component parts, resulting in an
inventory adjustment of $1.4 million.
(2) For the three and nine months ended September 30, 2023, the
other adjustments primarily represent restructuring activities
designed to improve the Company's operations and cost structure.
For the three and nine months ended September 30, 2022, the other
adjustments are represented by severance payments associated with a
workforce reduction in Venus Concept S.L. (Spain) and Venus Canada
of $0.7 million.
Investor Relations Contact:
ICR Westwicke on behalf of Venus Concept:
Mike Piccinino, CFA
VenusConceptIR@westwicke.com
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