CHF Solutions, Inc. Announces 52 Percent Increase in Revenue for Third Quarter 2020 and Provides Company Update
November 10 2020 - 8:00AM
CHF Solutions, Inc. (Nasdaq: CHFS) announced today its results for
the third quarter ended September 30, 2020.
Recent Highlights
- Revenue for the third quarter of
2020 was $1.9 million, an increase of 52% compared to the prior
year period
- Increased Aquadex™ therapy
utilization in existing pediatric hospital accounts; opened 6 new
pediatric hospital accounts
- Partnered with Acute Kidney Injury
Critical Care Research Foundation and Watermark Research Partners
to initiate a pediatric registry to collect real-world evidence for
the use of Aquadex SmartFlow™
- Announced the Aquadex product line
was added to the Federal Supply Schedule, expanding access to all
federal agencies and eliminating months of fulfillment process
time
- Hosted two webinars during the
quarter, led by:- Dr. David Askenazi, M.D. MSPH on treatment
of fluid overload on pediatric patients and clinical benefits of
Aquadex therapy- Dr. John Jefferies, M.D. on the use of precision
medicine for the treatment of fluid overload in heart failure
patients utilizing the Aquadex SmartFlow system
- A 355-patient
retrospective study was presented at the Annual Scientific Meeting
of Heart Failure Society of America, which showed substantial mean
fluid removal with no negative changes in renal function and
reduced rehospitalization rates in patients treated with Aquadex
therapy
- On November 3, 2020,
received notification from Nasdaq that the company had regained
compliance with NASDAQ’s minimum bid price requirement, after
effecting a 1-for-30 reverse stock split to remain in
compliance
- Cash and cash
equivalents totaled $17.9 million with no debt as of September 30,
2020
“CHF Solutions achieved very solid performance
in the third quarter, most notably within pediatric accounts,” said
John Erb, chairman and CEO of CHF Solutions. “The pediatric
opportunity is growing, as more children’s hospitals acquire our
Aquadex SmartFlow product and complete training. In the third
quarter, we had twelve children’s hospitals purchase product,
reinforcing our strategic focus in this area.”
Third Quarter 2020 Financial ResultsRevenue for
the third quarter was $1.9 million, an increase of 52% compared to
$1.3 million in the prior year period. Revenue growth in the
quarter was driven by increased utilization among established
pediatric accounts, and the addition of six new pediatric
accounts.
The Company offered incentives to existing
customers to upgrade consoles to Aquadex SmartFlow which impacted
third quarter gross margins. The Company believes these upgrades
will improve the customer experience with the therapy and increase
utilization. Additionally, the Company experienced a higher mix of
international distributor revenue which normally carries a lower
sales price than in the U.S. Gross margin was 46.1% in the third
quarter, compared to 56.9% in the prior year period.
Operating expenses for the third quarter of 2020
were $5.1 million, a decrease of 1.6% compared to the prior year
period. The slight decrease in operating expenses was primarily due
reduced product development costs compared to the prior year
period.
Net loss from operations for the third quarter of 2020 was $4.3
million, compared to a loss of $4.5 million in the prior year
period.
Cash and cash equivalents were $17.9 million
with no debt as of September 30, 2020. During the quarter, the
Company announced the closing of a public offering for net proceeds
of $13 million. The Company also received $1.8 million in cash
proceeds from the exercise of warrants in the third quarter of
2020.
Webcast and Conference Call InformationThe
Company will host a conference call and webcast at 9:00 AM ET today
to discuss its financial results and provide an update on the
Company’s performance. To access the live webcast, please visit
http://ir.chf-solutions.com/events. Alternatively, you may access
the live conference call by dialing (877) 303-9826 (U.S.) or (224)
357-2194 (international) and using conference ID: 6097367. An audio
archive of the webcast will be available following the call
at http://ir.chf-solutions.com/events.
About CHF Solutions CHF
Solutions, Inc. (Nasdaq: CHFS) is a medical device company
dedicated to changing the lives of patients suffering from fluid
overload through science, collaboration and innovation. The company
is focused on developing, manufacturing and commercializing the
Aquadex SmartFlow™ system for ultrafiltration therapy. CHF
Solutions is headquartered in Minneapolis, Minn., with wholly-owned
subsidiaries in Australia and Ireland. The company has been listed
on the Nasdaq Capital Market since February 2012.
About the Aquadex SmartFlow System The Aquadex
SmartFlow system delivers clinically proven therapy using a simple,
flexible and smart method of removing excess fluid from patients
suffering from hypervolemia (fluid overload). The Aquadex SmartFlow
system is indicated for temporary (up to 8 hours) or extended
(longer than 8 hours in patients who require hospitalization) use
in adult and pediatric patients weighing 20 kg or more whose fluid
overload is unresponsive to medical management, including
diuretics. All treatments must be administered by a health care
provider, within an outpatient or inpatient clinical setting, under
physician prescription, both having received training in
extracorporeal therapies.
Forward-Looking StatementsCertain statements in
this release are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including
without limitation, statements regarding the value that the company
brings to its customers. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future events to differ materially from the
forward-looking statements in this release, including, without
limitation, those risk associated with our ability to execute on
our commercialization strategy, the impact of the COVID-19
pandemic, the possibility that we may be unable to raise sufficient
funds necessary for our anticipated operations, our post-market
clinical data collection activities, benefits of our products to
patients, our expectations with respect to product development and
commercialization efforts, our ability to increase market and
physician acceptance of our products, potentially competitive
product offerings, intellectual property protection, our ability to
integrate acquired businesses, our expectations regarding
anticipated synergies with and benefits from acquired businesses,
and other risks and uncertainties described in our filings with
the SEC. Forward-looking statements speak only as of the date
when made. CHF Solutions does not assume any obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Financials
CHF SOLUTIONS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations and Comprehensive Loss (Unaudited)(In thousands, except
per share amounts)
| |
|
Three months ended September
30, |
Nine months endedSeptember
30, |
| |
|
2020 |
|
2019 |
|
|
2020 |
2019 |
|
|
Net sales |
$ |
1,904 |
|
$ |
1,252 |
|
$ |
5,397 |
|
$ |
4,144 |
|
| Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
1,026 |
|
|
540 |
|
|
2,486 |
|
|
1,987 |
|
|
Selling, general and administrative |
|
4,264 |
|
|
4,107 |
|
|
13,034 |
|
|
12,098 |
|
|
Research and development |
|
871 |
|
|
1,112 |
|
|
2,620 |
|
|
3,719 |
|
|
Total costs and expenses |
|
6,161 |
|
|
5,759 |
|
|
18,140 |
|
|
17,804 |
|
|
Loss from operations |
|
(4,257 |
) |
|
(4,507 |
) |
|
(12,743 |
) |
|
(13,660 |
) |
|
Other income (loss), net |
|
— |
|
|
(1 |
) |
|
— |
|
|
(1 |
) |
|
Loss before income taxes |
|
(4,257 |
) |
|
(4,508 |
) |
|
(12,743 |
) |
|
(13,661 |
) |
|
Income tax expense |
|
(3 |
) |
|
(1 |
) |
|
(7 |
) |
|
(5 |
) |
| Net loss |
$ |
(4,260 |
) |
$ |
(4,509 |
) |
$ |
(12,750 |
) |
$ |
(13,666 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted loss
per share |
$ |
(2.08 |
) |
$ |
(51.12 |
) |
$ |
(11.27 |
) |
$ |
(284.70 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares
outstanding – basic and diluted |
|
2,049 |
|
|
88 |
|
|
1,287 |
|
|
64 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive
loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
$ |
(7 |
) |
$ |
1 |
|
$ |
(12 |
) |
$ |
(4 |
) |
| Total comprehensive
loss |
$ |
(4,267 |
) |
$ |
(4,508 |
) |
$ |
(12,762 |
) |
$ |
(13,670 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
CHF Solutions, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets(In
thousands, except share and per share amounts)
|
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
| ASSETS |
|
(unaudited) |
|
|
|
|
| Current
assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
17,947 |
|
$ |
1,279 |
|
|
Accounts receivable |
|
1,048 |
|
|
799 |
|
|
Inventory |
|
2,921 |
|
|
1,797 |
|
|
Other current assets |
|
235 |
|
|
161 |
|
| Total current
assets |
|
22,151 |
|
|
4,036 |
|
|
Property, plant and equipment, net |
|
1,244 |
|
|
991 |
|
|
Operating lease right-of-use asset |
|
303 |
|
|
442 |
|
|
Other assets |
|
21 |
|
|
133 |
|
| TOTAL
ASSETS |
$ |
23,719 |
|
$ |
5,602 |
|
| |
|
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
| Current
liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
929 |
|
$ |
1,488 |
|
|
Accrued compensation |
|
2,012 |
|
|
1,592 |
|
|
Current portion of operating lease liability |
|
201 |
|
|
186 |
|
|
Current portion of finance lease liability |
|
24 |
|
|
— |
|
|
Other current liabilities |
|
57 |
|
|
85 |
|
| Total current
liabilities |
|
3,223 |
|
|
3,351 |
|
|
Operating lease liability |
|
108 |
|
|
261 |
|
|
Finance lease liability |
|
60 |
|
|
— |
|
| Total
liabilities |
|
3,391 |
|
|
3,612 |
|
| |
|
|
|
|
|
|
| Commitments and
contingencies |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Stockholders’
equity |
|
|
|
|
|
|
| Series A junior participating
preferred stock as of September 30, 2020 and December 31, 2019, par
value $0.0001 per share; authorized 30,000 shares, none
outstanding |
|
— |
|
|
— |
|
| Series F convertible preferred
stock as of September 30, 2020 and December 31, 2019, par value
$0.0001 per share; authorized 127 and 535 shares, respectively,
issued and outstanding 127 and 535, respectively |
|
— |
|
|
— |
|
| Preferred stock as of
September 30, 2020 and December 31, 2019, par value$0.0001 per
share; authorized 39,969,873 and 39,969,465 shares, none
outstanding |
|
— |
|
|
— |
|
| Common stock as of September
30, 2020 and December 31, 2019, par value$0.0001 per share;
authorized 100,000,000 shares, issued and outstanding2,736,060 and
155,802, respectively |
|
— |
|
|
— |
|
| Additional paid in
capital |
|
249,378 |
|
|
218,278 |
|
| Accumulated other
comprehensive income: |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
1,202 |
|
|
1,214 |
|
| Accumulated deficit |
|
(230,252 |
) |
|
(217,502 |
) |
| Total stockholders’
equity |
|
20,328 |
|
|
1,990 |
|
| TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
23,719 |
|
$ |
5,602 |
|
| |
|
|
|
|
|
|
CHF SOLUTIONS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of Cash
Flows(Unaudited)(in thousands)
| |
|
Nine months endedSeptember
30, |
|
|
|
2020 |
|
|
2019 |
|
|
Operating Activities: |
|
|
|
|
|
|
| Net loss |
$ |
(12,750 |
) |
$ |
(13,666 |
) |
| Adjustments to reconcile net loss
to cash flows used in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
253 |
|
|
179 |
|
|
Stock-based compensation expense, net |
|
1,036 |
|
|
1,113 |
|
|
Loss on disposal of property and equipment |
|
46 |
|
|
— |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(249 |
) |
|
258 |
|
|
Inventory |
|
(1,371 |
) |
|
(158 |
) |
|
Other current assets |
|
(74 |
) |
|
(74 |
) |
|
Other assets |
|
112 |
|
|
(27 |
) |
|
Accounts payable and accrued expenses |
|
(166 |
) |
|
38 |
|
| Net cash used in
operating activities |
|
(13,163 |
) |
|
(12,337 |
) |
| |
|
|
|
|
|
|
| Investing
Activities: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(207 |
) |
|
(464 |
) |
| Net cash used in
investing activities |
|
(207 |
) |
|
(464 |
) |
| |
|
|
|
|
|
|
| Financing
Activities: |
|
|
|
|
|
|
|
Proceeds from public stock offerings, net |
|
25,949 |
|
|
10,959 |
|
|
Proceeds from warrant exercises |
|
4,115 |
|
|
— |
|
|
Payments on finance lease liability |
|
(14 |
) |
|
— |
|
| Net cash provided by
financing activities |
|
30,050 |
|
|
10,959 |
|
| |
|
|
|
|
|
|
| Effect of exchange rate changes
on cash |
|
(12 |
) |
|
(4 |
) |
| Net increase in cash and cash
equivalents |
|
16,668 |
|
|
(1,846 |
) |
| Cash and cash equivalents -
beginning of period |
|
1,279 |
|
|
5,480 |
|
| Cash and cash equivalents
- end of period |
$ |
17,947 |
|
$ |
3,634 |
|
| |
|
|
|
|
|
|
| Supplemental cash flow
information |
|
|
|
|
|
|
|
Cash paid for income taxes |
$ |
— |
|
$ |
— |
|
|
Inventory transferred to property, plant and equipment |
$ |
247 |
|
$ |
204 |
|
|
Equipment acquired through finance lease liability |
$ |
98 |
|
$ |
— |
|
CONTACTS:
INVESTORS:
Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
952-345-4205
ir@chf-solutions.com
Matt Bacso, CFA
Gilmartin Group LLC
Matt.bacso@gilmartinir.com
MEDIA:
Jessica Stebing
Health+Commerce
260-336-6202
jstebing@healthandcommerce.com
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