Venus Concept Inc. (“Venus Concept” or the “Company”) (NASDAQ:
VERO), a global medical aesthetic technology leader, announced
financial results for the three and six months ended June 30, 2022.
Second Quarter 2022 Summary &
Operating Highlights:
- Total revenue of $27.3 million, up
$1.4 million, or 6%, year-over-year.
- U.S. revenue up 7%
year-over-year.
- Total subscription and system
revenue up 9% year-over-year.
- GAAP net loss attributable to
stockholders of $10.6 million, compared to net income of $0.4
million last year.
- Second quarter 2021 GAAP net loss
attributable to stockholders included approximately $6 million of
non-cash gain and bad debt recovery which did not benefit GAAP net
loss attributable to stockholders in the second quarter of
2022.
- Adjusted EBITDA loss of $5.5
million, compared to Adjusted EBITDA income of $0.5 million last
year.
- On April 25, 2022, the Company
announced the first patient treatment in a U.S. Investigational
Device Exemption (IDE) clinical study evaluating the safety and
efficacy of the Company’s Aime™ next generation robotic technology
for the treatment of moderate to severe facial wrinkles. Aime is a
robotic platform designed to provide micro-coring for medical
aesthetic applications.
- On April 28, 2022, the Company
announced that it received a 510(k) clearance from the U.S. Food
and Drug Administration (“FDA”) to market the Venus BlissMAX device
(“BlissMAX”) with an expanded indication for use in new areas of
the body and an increase in RF energy output.
Management Commentary:
“Second quarter total revenue results were below
expectations driven by significant sales force disruption in a key
market in the U.S.,” said Domenic Serafino, Chief Executive Officer
of Venus Concept. “We experienced continued strong demand for Bliss
and BlissMAX in our ‘Body Franchise’ and our ARTAS iX and Neograft
in our ‘Hair Restoration Franchise’, and our sales team in the rest
of the U.S. executed our focused sales strategy well, delivering
24% growth in subscription and system sales to U.S. customers in
their respective regions in Q2.”
Mr. Serafino continued: “We have implemented a
series of strategic initiatives and expect our focused commercial
strategy, including prioritizing cash sales, and streamlined global
operations to enhance the cash flow profile of our business and
accelerate our path to long term profitability. We are also
evaluating non-dilutive financing opportunities to enhance our cash
position and balance sheet in the near term.”
Second Quarter and First Six Months of
2022 Revenue by Region and by Product Type:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
(dollars in thousands) |
|
|
(dollars in thousands) |
Revenues by region: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
13,417 |
|
|
$ |
12,571 |
|
|
$ |
26,546 |
|
|
$ |
23,086 |
International |
|
|
13,849 |
|
|
|
13,257 |
|
|
|
27,126 |
|
|
|
25,339 |
Total revenue |
|
$ |
27,266 |
|
|
$ |
25,828 |
|
|
$ |
53,672 |
|
|
$ |
48,425 |
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
(dollars in thousands) |
|
|
(dollars in thousands) |
Revenues by product: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription—Systems |
|
$ |
11,874 |
|
|
$ |
12,787 |
|
|
$ |
22,297 |
|
|
$ |
21,324 |
Products—Systems |
|
|
11,548 |
|
|
|
8,694 |
|
|
|
23,422 |
|
|
|
18,504 |
Products—Other
(1) |
|
|
3,080 |
|
|
|
3,314 |
|
|
|
6,577 |
|
|
|
6,369 |
Services (2) |
|
|
764 |
|
|
|
1,033 |
|
|
|
1,376 |
|
|
|
2,228 |
Total revenue |
|
$ |
27,266 |
|
|
$ |
25,828 |
|
|
$ |
53,672 |
|
|
$ |
48,425 |
(1) |
|
Products-Other include ARTAS procedure kits and other
consumables. |
(2) |
|
Services include extended warranty sales and VeroGrafters
technician services. VeroGrafters technician services were
discontinued in the fourth quarter of 2021. |
Second Quarter 2022 Financial Results:
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
Change |
|
(in thousands, except
percentages) |
|
$ |
|
|
% of Total |
|
|
$ |
|
|
% of Total |
|
|
$ |
|
|
% |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription—Systems |
|
$ |
11,874 |
|
|
43.5 |
|
|
$ |
12,787 |
|
|
|
49.5 |
|
|
$ |
(913 |
) |
|
|
(7.1 |
) |
Products—Systems |
|
|
11,548 |
|
|
42.4 |
|
|
|
8,694 |
|
|
|
33.7 |
|
|
|
2,854 |
|
|
|
32.8 |
|
Products—Other |
|
|
3,080 |
|
|
11.3 |
|
|
|
3,314 |
|
|
|
12.8 |
|
|
|
(234 |
) |
|
|
(7.1 |
) |
Services |
|
|
764 |
|
|
2.8 |
|
|
|
1,033 |
|
|
|
4.0 |
|
|
|
(269 |
) |
|
|
(26.0 |
) |
Total |
|
$ |
27,266 |
|
|
100.0 |
|
|
$ |
25,828 |
|
|
|
100.0 |
|
|
$ |
1,438 |
|
|
|
5.6 |
|
Total revenue for the second quarter of 2022
increased $1.4 million, or 5.6%, to $27.3 million, compared to the
second quarter of 2021. The increase in total revenue, by region,
was driven by a 7% increase year-over-year in United States revenue
and a 5% year-over-year increase in international revenue. The
increase in total revenue, by product category, was driven by a 33%
increase in systems revenue, partially offset by a 7% decrease in
lease revenue, a 26% decrease in services revenue and a 7% decrease
in products revenue. The percentage of total systems revenue
derived from the Company’s subscription model was approximately 51%
this quarter, compared to 60% in the prior year period.
Gross profit for the second quarter of 2022
increased $0.3 million, or 2%, to $19.0 million compared to the
second quarter of 2021. Gross margin was 69.9%, compared to 72.5%
of revenue for the second quarter of 2021. The change in gross
profit was primarily driven by an increase in revenue in the United
States driven by the Company’s hair restoration business. The
change in gross margin was driven by changes in foreign currencies
which depreciated relative to the U.S. dollar in the period.
Operating expenses for the second quarter of
2022 were $26.2 million, compared to $17.2 million for the second
quarter of 2021. The change in total operating expenses was driven
by an increase of $6.4 million, or 82%, in general and
administrative expenses and an increase of $0.4 million, or 20%, in
research and development expenses, offset partially by a decrease
of $0.6 million, or 6%, in sales and marketing expenses. In
addition, in the three months ended June 30, 2021, operating
expenses included a bad debt recovery of $3.2 million due to a
reactivation of accounts impacted by COVID-19 which did not repeat
in the three months ended June 30, 2022. The prior year period also
included a $2.8 million non-cash gain on forgiveness of government
assistance loans which did not repeat in the three months ended
June 30, 2022.
Operating loss for the second quarter of 2022
was $7.1 million, compared to operating income of $1.5 million for
the second quarter of 2021.
Net loss attributable to stockholders for the
second quarter of 2022 was $10.6 million, or $0.16 per share,
compared to net income of $0.4 million for the second quarter of
2021. Adjusted EBITDA loss for the second quarter of 2022 was $5.5
million, compared to adjusted EBITDA income of $0.5 million for the
second quarter of 2021.
Fiscal Year 2022 Revenue Guidance:
The Company now expects total revenue for the
twelve months ending December 31, 2022 in the range of $110 million
to $113 million, representing an increase of approximately 4% to
7%, year-over-year, compared to total revenue of $105.6 million for
the twelve months ended December 31, 2021.
Conference Call Details:
Management will host a conference call at 8:00
a.m. Eastern Time on August 12, 2022, 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 13731063. 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 13731063. 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 18
direct markets. Venus Concept focuses its product sales strategy on
a subscription-based business model in North America and in its
well-established direct global markets. Venus Concept’s product
portfolio consists of aesthetic device platforms, including Venus
Versa, Venus Legacy, Venus Velocity, Venus Fiore, Venus Viva, Venus
Glow, Venus Bliss, Venus BlissMAX, Venus Epileve and Venus Viva MD.
Venus Concept’s hair restoration systems include NeoGraft® and the
ARTAS® and ARTAS iX® Robotic Hair Restoration systems. 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 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; and general economic
conditions, including the global economic impact of COVID-19, and
involve risks and uncertainties that may cause results to differ
materially from those set forth in the statements. 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, 2021. 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(Unaudited)(In
thousands of U.S. dollars, except share and per share
data)
|
|
June 30, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,540 |
|
|
$ |
30,876 |
|
Accounts receivable, net of
allowance of $14,100 and $11,997 as of June 30, 2022, and December
31, 2021 |
|
|
46,754 |
|
|
|
46,918 |
|
Inventories |
|
|
22,363 |
|
|
|
20,543 |
|
Prepaid expenses |
|
|
2,169 |
|
|
|
2,737 |
|
Advances to suppliers |
|
|
2,869 |
|
|
|
2,162 |
|
Other current assets |
|
|
3,873 |
|
|
|
3,758 |
|
Total current assets |
|
|
88,568 |
|
|
|
106,994 |
|
LONG-TERM ASSETS: |
|
|
|
|
|
|
|
|
Long-term receivables |
|
|
26,724 |
|
|
|
27,710 |
|
Deferred tax assets |
|
|
579 |
|
|
|
284 |
|
Severance pay funds |
|
|
815 |
|
|
|
817 |
|
Property and equipment,
net |
|
|
2,395 |
|
|
|
2,669 |
|
Intangible assets |
|
|
13,670 |
|
|
|
15,393 |
|
Total long-term assets |
|
|
44,183 |
|
|
|
46,873 |
|
TOTAL ASSETS |
|
$ |
132,751 |
|
|
$ |
153,867 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Trade payables |
|
$ |
4,184 |
|
|
$ |
4,913 |
|
Accrued expenses and other
current liabilities |
|
|
17,449 |
|
|
|
19,512 |
|
Income taxes payable |
|
|
690 |
|
|
|
294 |
|
Unearned interest income |
|
|
2,884 |
|
|
|
2,678 |
|
Warranty accrual |
|
|
1,173 |
|
|
|
1,245 |
|
Deferred revenues |
|
|
1,800 |
|
|
|
2,030 |
|
Current portion of government
assistance loans |
|
|
— |
|
|
|
543 |
|
Total current liabilities |
|
|
28,180 |
|
|
|
31,215 |
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
77,507 |
|
|
|
77,325 |
|
Income tax payable |
|
|
582 |
|
|
|
563 |
|
Accrued severance pay |
|
|
931 |
|
|
|
911 |
|
Deferred tax liabilities |
|
|
58 |
|
|
|
46 |
|
Unearned interest income |
|
|
1,433 |
|
|
|
1,355 |
|
Warranty accrual |
|
|
437 |
|
|
|
508 |
|
Other long-term
liabilities |
|
|
227 |
|
|
|
348 |
|
Total long-term liabilities |
|
|
81,175 |
|
|
|
81,056 |
|
TOTAL LIABILITIES |
|
|
109,355 |
|
|
|
112,271 |
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
Common Stock, $0.0001 par
value: 300,000,000 shares authorized as of June 30, 2022 and
December 31, 2021; 64,399,044 and 63,982,580 issued and outstanding
as of June 30, 2022, and December 31, 2021, respectively |
|
|
27 |
|
|
|
27 |
|
Additional paid-in
capital |
|
|
222,393 |
|
|
|
221,321 |
|
Accumulated deficit |
|
|
(199,583 |
) |
|
|
(180,405 |
) |
TOTAL STOCKHOLDERS’
EQUITY |
|
|
22,837 |
|
|
|
40,943 |
|
Non-controlling interests |
|
|
559 |
|
|
|
653 |
|
|
|
|
23,396 |
|
|
|
41,596 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
132,751 |
|
|
$ |
153,867 |
|
Venus Concept
Inc.Condensed Consolidated Statements of
Operations(Unaudited)(In
thousands of U.S. dollars, except per share data)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases |
|
$ |
11,874 |
|
|
$ |
12,787 |
|
|
$ |
22,297 |
|
|
$ |
21,324 |
|
Products and services |
|
|
15,392 |
|
|
|
13,041 |
|
|
|
31,375 |
|
|
|
27,101 |
|
|
|
|
27,266 |
|
|
|
25,828 |
|
|
|
53,672 |
|
|
|
48,425 |
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases |
|
|
2,761 |
|
|
|
2,736 |
|
|
|
5,461 |
|
|
|
4,506 |
|
Products and services |
|
|
5,459 |
|
|
|
4,375 |
|
|
|
11,402 |
|
|
|
9,968 |
|
|
|
|
8,220 |
|
|
|
7,111 |
|
|
|
16,863 |
|
|
|
14,474 |
|
Gross profit |
|
|
19,046 |
|
|
|
18,717 |
|
|
|
36,809 |
|
|
|
33,951 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
9,487 |
|
|
|
10,114 |
|
|
|
19,390 |
|
|
|
17,968 |
|
General and administrative |
|
|
14,249 |
|
|
|
7,828 |
|
|
|
27,343 |
|
|
|
19,993 |
|
Research and development |
|
|
2,436 |
|
|
|
2,024 |
|
|
|
4,638 |
|
|
|
4,075 |
|
Gain on forgiveness of government assistance loans |
|
|
— |
|
|
|
(2,775 |
) |
|
|
— |
|
|
|
(2,775 |
) |
Total operating expenses |
|
|
26,172 |
|
|
|
17,191 |
|
|
|
51,371 |
|
|
|
39,261 |
|
(Loss) income from
operations |
|
|
(7,126 |
) |
|
|
1,526 |
|
|
|
(14,562 |
) |
|
|
(5,310 |
) |
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss |
|
|
2,370 |
|
|
|
130 |
|
|
|
2,375 |
|
|
|
844 |
|
Finance expenses |
|
|
1,034 |
|
|
|
1,161 |
|
|
|
1,957 |
|
|
|
3,046 |
|
(Loss) income before income
taxes |
|
|
(10,530 |
) |
|
|
235 |
|
|
|
(18,894 |
) |
|
|
(9,200 |
) |
Income tax (benefit)
expense |
|
|
(18 |
) |
|
|
(7 |
) |
|
|
254 |
|
|
|
(7 |
) |
Net (loss) income |
|
|
(10,512 |
) |
|
|
242 |
|
|
|
(19,148 |
) |
|
|
(9,193 |
) |
Net (loss) income attributable
to stockholders of the Company |
|
|
(10,559 |
) |
|
|
377 |
|
|
|
(19,178 |
) |
|
|
(8,882 |
) |
Net income (loss) attributable
to non-controlling interest |
|
|
47 |
|
|
|
(135 |
) |
|
|
30 |
|
|
|
(311 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.16 |
) |
|
$ |
0.01 |
|
|
$ |
(0.30 |
) |
|
$ |
(0.16 |
) |
Diluted |
|
$ |
(0.16 |
) |
|
$ |
0.01 |
|
|
$ |
(0.30 |
) |
|
$ |
(0.16 |
) |
Weighted-average number of
shares used in per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
64,130 |
|
|
|
54,088 |
|
|
|
64,059 |
|
|
|
53,917 |
|
Diluted |
|
|
64,130 |
|
|
|
54,237 |
|
|
|
64,059 |
|
|
|
53,917 |
|
Use of Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP measure defined as net income
(loss) before foreign exchange loss (gain), 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 June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Reconciliation of net
loss to adjusted EBITDA |
|
(in thousands) |
|
|
(in thousands) |
|
Net (loss) income |
|
$ |
(10,512 |
) |
|
$ |
242 |
|
|
$ |
(19,148 |
) |
|
$ |
(9,193 |
) |
Foreign exchange loss |
|
|
2,370 |
|
|
|
130 |
|
|
|
2,375 |
|
|
|
844 |
|
Finance expenses |
|
|
1,034 |
|
|
|
1,161 |
|
|
|
1,957 |
|
|
|
3,046 |
|
Income tax (benefit)
expense |
|
|
(18 |
) |
|
|
(7 |
) |
|
|
254 |
|
|
|
(7 |
) |
Depreciation and
amortization |
|
|
1,111 |
|
|
|
1,147 |
|
|
|
2,212 |
|
|
|
2,451 |
|
Stock-based compensation
expense |
|
|
558 |
|
|
|
558 |
|
|
|
1,001 |
|
|
|
1,066 |
|
Gain on forgiveness of
government assistance loans |
|
|
— |
|
|
|
(2,775 |
) |
|
|
— |
|
|
|
(2,775 |
) |
Adjusted EBITDA |
|
$ |
(5,457 |
) |
|
$ |
456 |
|
|
$ |
(11,349 |
) |
|
$ |
(4,568 |
) |
Investor Relations Contact:
ICR Westwicke on behalf of Venus Concept:
Mike Piccinino, CFA
VenusConceptIR@westwicke.com
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